The government and the ruling party have set labor reform as their top priority in the second half of this year. Under the agreement, the Saenuri Party has formed an ad-hoc committee to push the reform program.
There is no doubt that without reforming the notoriously rigid labor market, Korea will be unable to overcome the low-growth trap and the worsening unemployment problems.
The recent developments have added urgency to the need for labor reform: The economy grew less than 1 percent for the fifth consecutive month, youth employment hit a record high and the number of nonregular workers keeps growing. Moreover, the retirement age is set to be extended to 60 next year, which necessitates an early introduction of the wage peak system.
The most pressing reform is to increase flexibility -- for both hiring and layoffs and wages -- to address the polarization of the labor market -- torn between regular, full-time workers and part-time, nonregular workers, and between workers at big companies and small firms.
Few disagree with the need to address these problems, but there seems to be considerable disagreement among the concerned parties as to how to achieve it.
Both President Park Geun-hye and Saenuri leader Kim Moo-sung have suggested the revival of the tripartite committee of government, labor and management to work out a “grand social compromise.” Kim also mentioned the possibility of establishing a parliamentary panel.
In contrast, the main opposition New Politics Alliance for Democracy insists that there should be a new form of three-party talks and the two umbrella labor groups -- the Korean Confederation of Trade Unions and the Federation of Korean Trade Unions -- should be represented in the discussions.
It would be good if the tripartite committee could come to the table again and forge an agreement. It would be as good if a new form of panel including the umbrella unions could pull off a compromise.
But we know this is a very tall order, given the way similar issues had been tackled in the past. One needs to look no further than the recent reform of the government employees’ pension system.
The reform of the pension scheme ended in a half-success as it failed to find a fundamental solution to the problem of pensioners receiving much more than they contribute. The reform program calls for the pensioners to pay more and receive less, but the scope of the change was not enough to make up for its huge deficits being covered by taxpayers’ money.
Much of the responsibility for the incomplete reform of the pension plans lies with political parties, which brought representatives of government workers’ unions into the special panel tasked with working out reform proposals. With the unions resisting almost every proposal to cut the benefits they had been enjoying, the talks could not have made headway.
It is under a similar backdrop we see little possibility of a tripartite committee or similar bodies facilitating a compromise on labor reform, which, in all respects, would be much harder to achieve than pension reform.
As for the tripartite committee, it has been in hiatus since the KCTU walked away from the negotiating table in April. It led to the resignation of chairman Kim Dae-hwan, and the panel has yet to name his successor. It would be very hard to restore its vitality and leadership to take charge of the labor reform.
This is why we call for strong political leadership -- especially from Park and the ruling party leader -- in persuading unions and the opposition and to, if necessary, force their way. Kim said that in pushing for labor reform, the ruling party should run the risk of losing votes in the upcoming elections. This is the kind of leadership we hope to see.