In his New Year’s address, President Yoon Suk-yeol reaffirmed his commitment to pushing for labor, education and pension reforms -- three key sectors that have long defied structural reforms despite their critical roles for the future of South Korea.
“The Republic of Korea’s future and our future generations’ fate depend upon three major reforms: labor, education and pension,” Yoon said. "These cannot be delayed any longer."
Yoon’s priority among the three sectors appears to be placed on labor reforms. The underlying assumption, revealed in his address, is that the country’s labor market needs to be overhauled in a way that incorporates more flexibility and the rule of law when it comes to labor disputes.
It is no secret that South Korea’s big corporations have strong labor unions, some of which are accused of excessively pursuing their own interest without properly considering the situations of their workplaces.
It is also true that the country’s long-standing labor market based on seniority needs to evolve to embrace a performance-based pay system and stay competitive in the global market amid intensifying competition and protectionist trends.
In particular, Yoon’s emphasis on the rule of law in labor relations underlines the side effects of powerful labor unions and umbrella labor organizations. At the same time, Yoon seems to have a strong position against illegal walkouts and politically motivated strikes by applying the principle of the rule of law.
The majority of Korean people may well prefer sustainable management-labor relations, as their cooperation is the key to enhancing productivity and driving corporate growth -- compared with wasteful, confrontational and emotionally charged labor disputes.
But the government should take cautious steps in pushing for labor reforms, especially concerning the transition to performance-based pay. The foremost prerequisite for introducing a truly performance-based pay system is the establishment of clear, objective and scientific assessment standards that can be applied to various workplaces. A number of Korean companies have already tried to adopt a new pay system that could replace seniority-based standard -- only to face complaints and disputes since there are too many tricky factors to be considered.
Not all jobs can be assessed through sales figures or numerical elements. There are many areas and occupations that need in-depth qualitative assessment standards for workers’ overall contribution to companies. But this is easier said than done. Conservative pundits blame hard-line labor unions, but they willfully omit the fact that Korean conglomerates are accused of failing to follow transparent performance-based standards in the hiring and promotion of employees.
Double standards benefit nobody. Applying the strict rule of law to laypeople but granting presidential pardons to chaebol chiefs imprisoned for crimes does not seem fair and square, much less a desirable labor standard based on the rule of law.
The government should act in a fair manner when it deals with issues involving laborers, unions, management and chaebol families, especially as it relates to violations of the law. It should also work with not only business leaders, but also unions and related organizations to help hammer out compromises rather than falling into confrontational disputes.
As for higher education, the need for reform is urgent. Companies are in dire need of skilled and creative workers to cope with fast-changing technological trends. As with other sectors, educational institutions, including top-ranked universities, are falling behind their counterparts in other advanced countries due to their resistance to reforms and the rigid policy of education authorities. Furthermore, normalizing higher education requires a long-term plan and careful implementation of new policies in order to minimize adverse impact on students.
Reconfiguring policies related to the national pension and other major pension systems is also difficult in many respects. The government should overcome challenges from those with vested interests to fix the current pension system, which is suffering from snowballing deficits.
There is no question that the Yoon administration should make efforts to implement reforms in labor, education and pension for the future of the country. But Yoon should bear in mind that his reform drive could easily become bogged down and collapse unless he works with lawmakers from the main opposition Democratic Party of Korea, which holds a majority at the National Assembly.