The government, businesses and labor groups kicked off a dialogue Wednesday to seek ways to weather the economic crisis caused by the coronavirus pandemic.
Two mainstream labor groups attended the dialogue for the first time in 22 years after a labor-management-government committee was launched in 1998 to overcome the currency crisis that hit the country. At that time, Korea received bailout funds from the International Monetary Fund to escape the crisis.
The start of the dialogue shows how severe economic stagnation and workforce reductions are.
According to Statistics Korea, the number of employees on furlough in April was 1.48 million, up 1.13 million from the same month last year. The number in March was 1.6 million, up 1.26 million from a year earlier. The numbers and margins of increase were the highest since related data was first compiled in July 1983.
Workers on furlough are statistically classified as being employed. If economic stagnation is prolonged, they will likely become jobless or economically inactive. The World Health Organization warns that we are in for a long fight against the coronavirus disease.
According to the Korea Labor & Society Institute, the number of employed in April was 1.02 million fewer than in February. For comparison purposes, the 1998 currency crisis put 920,000 people out of work in the first two months.
Economically vulnerable groups, including irregular workers at small and medium-sized companies, were the first to be hit. Now an employment cliff is imminent for regular staff members at large companies.
Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said the government will create more than 550,000 jobs in the public sector, but fiscally created jobs are unsustainable. It is urgent to create jobs in the private sector.
The goal of the dialogue is to minimize the negative impact of the coronavirus on employment. An employment cliff is a difficult problem because of the different positions of labor and business. Labor groups demand a ban on layoffs and a tighter safety net for those who are out of work, while businesses call for limits on wage hikes and flexibility in the application of regulations on the maximum number of working hours.
A day before the dialogue, the Federation of Korean Trade Unions held a press conference in front of the Korea Enterprises Federation, a lobby for employers, and called for large companies to spend their cash reserves to keep their workers employed. This kind of pressure does not help solve the problem.
Employment is possible when companies exist. Now, business performance is plummeting. The operating and net profits of Kospi-listed companies fell 31 percent and 48 percent year-on-year, respectively, in the first quarter. Their second-quarter results are expected to be worse.
A survey shows massive layoffs will be inevitable in one-third of large companies if the economic shock from COVID-19 is prolonged for more than six months. Labor groups must not think that businesses are exaggerating their hardships to solicit as many concessions as possible.
Differences in the positions of labor, management and the government are inevitable. But if one side sticks to its guns and tries to put pressure on the other, they can never reach an agreement. Under the common goal of reviving the economy and protecting jobs, both labor and management need to consider a middle ground, such as shortening working hours and sharing jobs. Participants in the dialogue must try to understand one another and figure out what to give rather than what to get.
When negotiations are stalled, the mediating role of the government will be more important. The government vowed to offer incentives to companies if they maintain employment, but it must not end up with symptomatic therapy. It should try to grasp what is truly needed to sustain employment. The government must also try to dispel concerns that it is inclined toward labor.
Employment shock and business difficulties are already a reality. Dialogue must proceed as efficiently and quickly as possible. It has just begun and must be continued. Self-restraint and willingness to share pains are required.