Quality labor pays

Chang Ha-joon

In order to revitalize the economy, household incomes must improve, pronounced Choi Kyung-hwan, the new deputy prime minister and finance minister. To bolster household income, jobs and wages must increase. He promised to seek improvements in job status and security for millions of irregular workers. He has identified both urgent and structural economic problems weighing on the local economy. The fact that he included employment, wages and the irregular work force as policy targets is refreshing and meaningful for Korea, which has been passive about addressing labor issues despite their importance to the economy.

Labor issues have carried a stigma on the south side of the peninsula following a war and ongoing confrontation with the communist regime in the North led by the “Workers’” Party. Labor activities were regarded and oppressed as anti-society and a communist movement in the 1970s. The words “labor” and “workers” were taboo. Labor issues somehow were dealt with as security and social - rather than economic - challenges.

The labor department in the Ministry of Health and Society was elevated to the Labor Ministry in 1981. Labor activities gushed forward and grew beyond forced suppression. Still, labor policy remained at the bottom of the list of economic priorities. Since the 1980s, domestic policy architects were mostly from the school of neoclassical economics that emphasized growth and profit and assumed labor rights would improve naturally with better economic conditions.

Neoclassical economics is not anti-labor, but it categorizes the individual as a consumer rather than a manufacturer. Individuals get satisfaction through the purchase of goods and services. They have have an innate dislike of work, which makes them an inefficiency element. They work merely to spend.

But work is a central part of human life. When full-time housewives and caregivers are counted as part of the working population, most Korean adults work. They work half of their waking hours, except for weekends. When commuting time is included, the time most adults spend on work gets longer.

Because labor takes up much of everyday life, its quality can also dominate our lifestyle. If the quality of labor declines even with higher income, overall well-being could deteriorate.

Measuring the quality of labor is not simple. First of all, it must be assessed from a physical perspective - how physically demanding it is and hazardous it can be to physical and mental health. Then there is the intelligence element - how much creativity work demands and how fun it is. The psychological aspect also cannot be disregarded. If one feels insecure about his or her job because of non-regular status, he or she may not be satisfied with work.

Improvement in labor quality does not always translate into better benefts for workers. If one does not feel stressed and burned out and instead enjoys and feels confident about work, productivity will increase.

Although well aware of the factors that could support productivity, employers cannot easily improve labor standards to fully satisfy employees. If they invest to hone labor productivity ? for instance,hiring non-regular workers on a permanent basis and purchasing new safety garments and equipment ? they could fall behind the competition. It is why the government needs to impose regulations to level the playing field for companies so they can afford to spend on improving work conditions.

The government can make the argument that regulations are a disadvantage for exporters that must compete with foreign rivals. But foreign countries and companies spend much more to sustain a high level of work and labor conditions. They have a lot of regulations and guidelines on labor and invest in social welfare so irregular and part-time workers do not live worrying about losing their jobs. If regulations are imposed gradually, companies can compete with foreign rivals even while investing on improving the quality of work.

Korean companies may lose out when competing with latecomers from developing economies. But Korean companies have become mature enough to compete in technology and innovation. We should not be looking over our shoulders to compete with companies whose strengths are a cheap labor force and low prices.

To raise the quality of work is not only important for employees’ welfare, but also for the country’s competitiveness and productivity. As long as we do not rush things, an improved working environment and better conditions could serve well both individuals and the country.

Translation by the Korea JoongAng Daily staff.

JoongAng Ilbo, July 31, Page 31

*The author is a professor of economics at the University of Cambridge.

BY Chang Ha-joon