Lobbyists’ report trashes Moon’s policies

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Lobbyists’ report trashes Moon’s policies

A recent analysis by five business lobbying groups of the Moon Jae-in administration’s labor policies has created a stir.

A 45-page internal report entitled “Analysis of the government’s campaign pledges and business community’s opinion” consists of 30 chapters on such topics as jobs, labor relations, the economy and welfare. It criticizes the Moon administration’s policies and comes up with alternatives.

The report, exclusively obtained by the JoongAng Ilbo, was drafted with input from five major business lobbying groups: the Korea Employers Foundation, the Korea International Trade Association, the Korea Chamber of Commerce and Industries, the Federation of Korean Industries and the Korea Federation of SMEs. Those institutions represent businesses of different sizes and characters. They had a closed-door discussion on May 30.

As news of the report spread, however, the lobbying groups worried that they might face repercussions from the liberal, labor-friendly administration. The Korea Employers Federation, which is known to have compiled documents for the report, rushed out a statement on Thursday saying the report in question has “never been discussed and reviewed.

“The report, mostly containing raw data, was in the middle of being prepared to serve as a reference and is far from official,” the statement said.

That federation was criticized by the new administration a few days earlier for preparing to publish a book that deals with the controversies over contract workers and the government’s attempt to get companies to put them on staff. One of Moon’s key campaign pledges was achieving “zero non-regular workers,” referring to contract workers that aren’t salaried employees with benefits.

According to the report, the gap in perspective on “non-regular workers” is extensive between the government and the corporate sector. While the Moon government equates contract work with lousy jobs, Korea’s big business groups think contract workers give them necessary flexibility in their labor pool. Moon’s policymakers think corporate-friendly labor policies of the past two conservative administrations led to a huge increase in the number of non-regular jobs, which resulted in the widening of unequal opportunities and income disparities.

Korea’s corporate world barely uses the “non-regular worker” terminology. They categorize workers on whether they have limited contracts or not. That suggests the government and businesses are far apart in finding any kind of solution to the problem.

Another critical issue is the Moon government’s plan to raise the minimum wage from 6,470 won ($5.80) to 10,000 won per hour by 2020 - and even higher depending on how big a household the worker supports.

The report insists that Korea’s minimum wage isn’t low, citing the OECD. In fact, labor costs have risen so rapidly in the past 15 years, the report says, that smaller companies are suffering. If the minimum wage then rises for workers with larger families, the basic principle that a salary is the price of labor is broken, the report concludes.

The administration is also firm on its stance that the current unemployment problem should be taken care of by the corporate sector. It argues that the more profitable a company is, the more jobs it should offer. But Korean companies have gotten used to outsourcing jobs to smaller contractors, which is more efficient and leads to more profit.

The report takes on the most basic issue of government meddling. In a system that imposes too many restrictions, companies can’t manage efficiently. To create more jobs, businesses need to foster high value-added service industries, but overlapping regulatory barriers get in the way, preventing the creation of more job, it noted.

Moon is vowing to amend laws related to creating more jobs in the public sector and forcing companies to open up more jobs.

The report says that’s misguided. It specifically criticizes the youth job quota system, another of Moon’s campaign pledges. Under such a system, companies with 300 or more employees should have at least 3 percent of their employees under the age of 30.

The report says this goes against market principles. It argues that Belgium introduced a similar quota system in 2000 but it failed. It boosted the employment rate for young people temporarily, but the jobs created in the initial stage weren’t of good quality.

“Easing overprotection of salaried workers and a labor structure centered around duties and assessment” would be a solution to the employment problem, according to the report.

Analysts say an external force mandating the corporate community take action to resolve certain problems will only result in unforeseen consequences.

SK Broadband, for instance, made a bold decision to establish a subsidiary to absorb contract workers employed by its subcontractors in tandem with Moon’s inauguration. Now the contractors are on the verge of shutting down their companies.

“A platform that lets all the interested parties discuss freely is necessary,” said Kim Sang-bong, a professor of economics at Seoul-based Hansung University. “Even if labor and business communities have different stances, they need to find a way to reach a compromise that will work positively for the economy.”

BY SEO JI-EUN, JEON YOUNG-SUN [seo.jieun@joongang.co.kr]
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