Industrial relations are expected to be highly unstable this year as a host of labor issues remain unresolved. A recent survey conducted by the Korea Employers Federation has found that more than 3 out of 4 companies expect industrial relations to worsen in 2014 compared with last year.
Many companies predict the expanded scope of ordinary wages will be the biggest labor issue this year. In December, the Supreme Court ruled that non-monthly bonuses, if paid out regularly, constituted part of ordinary wages.
The landmark ruling was expected to put an end to a protracted dispute on ordinary wages. But it raised more questions than it answered.
So one month later, the Ministry of Employment and Labor revised its guidelines on ordinary wages to sort out newly raised questions. Yet this only fueled feuds between labor and management as workers viewed it as being too employer-friendly.
As things stand now, trade unions are likely to file suits should management refuse to apply the court’s definition of ordinary wages to their wage calculations. To address the problem, the ministry needs to rush to revise the relevant law to simplify the wage structure.
Another issue that could ignite conflict is the government’s plan to reduce maximum weekly working hours from the present 68 ― the normal 40-hour workweek, plus up to 12 hours of overtime on weekdays and 16 hours on the weekend ― to 52 by reclassifying weekend work as overtime.
The ministry is pushing for the passage of the legislation on working hours this month as the Supreme Court is set to hand down a ruling that nullifies the ministry’s outdated guideline.
The push for shortened work hours is aimed at improving the work-family balance and creating more part-time jobs. The measure is well-advised. Yet it could fuel conflict as employers would seek to cut wages in proportion to the reduction in work hours ― something workers would not accept.
The planned extension of the legally binding retirement age to 60 from 2016 is another dividing issue. The relevant law simply states that companies should introduce a wage peak system before 2016, without specifying the details.
Recently, the KEF proposed two versions of the wage peak system to help companies prepare for the implementation of the extended retirement age. Yet workers are against any attempt to cut their wages in connection with the delay in retirement.
All these issues are related to wages, suggesting that the best way to resolve them is to put all of them on the table and pursue a package deal. For this to happen, it is essential to reactivate social dialogue among the representatives of trade unions, employers and the government.
But the Economic and Social Development Commission, the social dialogue body in Korea, is not functioning properly as the Federation of Korea Trade Unions recently walked out to protest the government’s push for reform of public institutions.
The government needs to find ways to start social dialogue. Labor groups need to realize that rejecting social dialogue is not necessarily beneficial for workers.