Call for law to govern labor reform’s main issues

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Call for law to govern labor reform’s main issues


Representatives of the government, unions and businesses pose after signing an agreement on labor market reforms at the Seoul government complex in downtown Seoul on Tuesday. Second from left, Deputy Prime Minister for the Economy and Finance Minister Choi Kyung-hwan, Federation of Korean Trade Unions Chairman Kim Dong-man, center, and Korea Employers Federation Chairman Bahk Byong-won, second from right. By Park Jong-geun

The nation’s five largest associations of employers and businessmen have criticized the labor reform deal struck by unions, companies and the government as unsatisfactory and are calling for a specific law on the two main issues - a wage cut for senior workers and the layoff of underperforming workers.

A joint statement released on Tuesday by the five groups - the Federation of Korean Industries, Korea Chamber of Commerce and Industry, Korea Federation of SMEs, Korea International Trade Association and Korea Employers Federation - said the agreement was ambiguous and failed to legislate the most contentious issues: adoption of the so-called peak wage system and the right to dismiss less productive workers.

“The trilateral talks between unions, employers and government reached a deal despite many difficulties,” the statement read. “[But] it is still very lacking to call it ‘a labor
reform’ to create a fair and flexible
labor market in order to resolve youth unemployment.

“Over some core issues, such as revising working rules [for the peak wage system] or dismissing employment contracts, the agreement only says standards or procedures [for any change] will be based on the current law and previous rulings,” it added. “This lags behind the level of labor reform our society wants.”

The businessmen said in the statement they will push the assembly to propose a new law to resolve the issues, as the current Labor Standards Act is so “rigid” that it is weakening the vitality of the economy.

“As it is evident that real labor reform would be impossible through the trilateral agreement, the business sector is making its last attempt at labor reform by requesting legislation from the assembly,” it said.

On Sunday, negotiators from companies, unions and the government agreed on structural reforms for the nation’s labor market, including the two most sensitive issues - allowing employers to adopt the peak wage system that cuts wages for senior workers a few years before retirement and permitting employers to legally dismiss underperforming workers.

Although the ruling party and the government say they will push forward with legislation on other agreed issues, the two sensitive issues were not included in new bills.

At the talks, the parties agreed on making a formal “guideline” governing dismissal and salary issues, a non-binding rule urged by the government for both unions and employers. State-run companies and organizations follow formal guidelines.

“We want a new clause in the labor act to be included for the peak wage system and dismissal issues,” said an official from the Korea Employers Federation. “A guideline is not satisfactory to us.”

An official from the Ministry of Employment and Labor said, “Although it is not binding, and judges don’t consider a guideline in a labor dispute, a formal guideline is effective enough to push unions in the private sector on certain issues. We don’t think the ruling party would accept their call at the moment.”

President Park Geun-hye expressing her gratitude on Tuesday to the parties involved in the agreement.

“[The government] will never force unions to sacrifice and accept easier layoffs,” she said.


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