Labor reforms are vital

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Labor reforms are vital

Structural reform for Korea’s labor market is at a crossroads. Despite all the discussions among concerned parties over the last six months, a compromise wasn’t produced and final negotiations failed to meet the deadline earlier this week. Labor, management and the government’s vow to continue their attempts comes across as hollow. Even if they reach agreement on the tricky issues, it could end up being a low-level agreement. Analysts criticize all three sides for feigning agreement out of fear of being criticized for ineptness and insincerity.

The primary responsibility for the failure must be borne by the Federation of Korean Trade Unions (FKTU), which flatly refused to accept five proposals on the definition of base wages and treatment of non-salaried workers. Hardline union members’ intransigent attitudes forced their representative Kim Yong-man, chairman of the FKTU, to never budge from their demands. Companies also desired to stick to the status quo. Under such circumstances, dialogue cannot lead to a compromise. Compromise was never sincerely offered from the outset.

The government and politicians are not free from culpability. The National Assembly enacted a bill to extend the retirement age, but didn’t come up with ways to get around the additional costs for companies. The government’s strategy was foolish, too; it promised minimum wage hikes even before the negotiations.

The three-way negotiations were aimed at finding a common ground to overcome our economic malaise through some real, painful reforms. Taking a cue from the Netherlands’ Wassenaar Agreement and Germany’s Hartz reforms, the dialogue sought to achieve labor reforms based on a grand consensus. Our society still has a long way to go when it comes to any kind of consensus, not to mention grand ones.

Individual companies are in wage negotiations with their unions without waiting for a grand bargain.

Failure of the labor reforms pose a grave threat to our economy. All parties involved must address the most urgent issues like poor treatment of non-salaried workers and the flexibility of our labor market. If reforms are delayed longer, it could trigger an explosion from our jobless youths.

If a grand compromise cannot be reached between labor and management, the government must consider the idea of bringing its own proposal to the legislature. Europe’s success in this realm was possible thanks to the strong government leadership.

JoongAng Ilbo, April 3, Page 34

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