The Korean economy has been suffering through relative hardships of late, with a continuously widening trade imbalance, sluggish export performance and lackluster economic growth grabbing the headlines. And there are as many measures on offer to cope with such difficulties as there are factors which seem to have caused the economic slowdown.

The Korean government has cited a weakened competitiveness for enterprises in international markets as one of the major factors for the dragging economy and has come up with a variety of steps designed to heighten their prospects. One of those steps has been to attempt to correct the "undesirable" labor practices and labor market system which the government says caused an "unbearable" burden on the companies due to excessively high costs for manpower. Under the circumstances, the administration has attempted to revise the labor law which has virtually remained untouched since it was implemented 44 years ago. But the changes have sparked high-profile repercussions from labor circles.

Against all odds, the National Assembly passed the labor law in a plenary session on March 10 after a long tug-of-war between the ruling and opposition parties. The early labor law, designed to address conflict and confrontation between labor and management during the early stages of the nation's industrialization, four decades later is the cause of several factors which have undermined the desirable labor-management relationship. In addition, the law has failed to provide the company owners with the competitiveness they need to survive the harsh open-market competition due to its strict regulations. In this respect, the newly passed labor law can be regarded as a starting point for the reform of the old-type labor-management relations in preparation for the coming 21st century.

The revision of the labor law features, among other things, raising labor-related regulations to the level of international standards, by introducing, for example, steps designed to minimize possible damage due to strikes and to set up an effective channel of dialog between labor and management.

The revision of the labor law paved the way for a new labor-management culture at industrial sites. While expanding the self-rule of labor unions, the law aims to get rid of inappropriate negotiation between labor and management. With the enhancement of the flexibility in the labor market, enterprises will be able to heighten their production activities.

A flexible work time system will be introduced while the controversial multiple labor unions will be permitted, and reckless labor strikes will be curbed under the "no work, no pay" system. Compared with the law it replaces, the revised law has more than 100 different stipulations. Following are the main contents of the revised law.

A competitive era for the labor unions
Korea has prevented the setting up of multiple unions in a bid to promote labor-management relations, which has brought about repercussions both at home and from abroad. International organizations like the International Labor Organization (ILO) and the Organization for Economic Cooperation and Development (OECD), in particular, have raised the issue, saying the regulation has undermined the right for collective negotiation on the part of the workers. Under the newly revised law, formation of multiple unions will be permitted immediately in the upper level unions-those that act as federations or associations of individual industrial unions. But it does not allow the setting up of multiple unions in each of the work sites until 2002, with a view to minimizing possible confusion in labor-management relations and negotiations.

The regulation prohibiting political participation by labor unions was removed in the revised law. Politics-related laws will deal with the matter instead. In order to prevent possible transformation of labor unions into political organizations, the law stipulates that organizations with the primary purpose of political and social movement shall not be considered labor unions.

A ban on wages for full-time union leaders
From the year 2002, management will be banned from paying wages to full-time union leaders. This may serve to spawn financial problem for unions and serve as hindrance to the creation of multiple unions. In fact it may become almost impossible for small and medium-sized companies to form labor unions. In the amendment, however, a new non-binding code was inserted declaring that the government, management and unions would make a concerted effort to establish a tax-deductible fund aimed at reducing the side effects arising from the termination of wages for full-time union staff.

An extended period for wage negotiations
The effective period for wage negotiation was extended from one to two years. Until now, with the period set at only one year, ineffective efforts to start labor negotiation every year resulted.

Intervention of third parties
With regard to the intervention of third parties, the amendment clarifies the scope and rights. As long as either management or labor union report to the Labor Ministry, each side can seek professional help from a third party such as upper-level organizations or lawyers concerning wages and other aspects of negotiations. But except for those authorized third parties, others are banned from intervening in, manipulating or instigating collective bargaining or acts of dispute. This is to secure autonomy in labor-management relations and promote a stable industrial society.

Replacing strikers
Employers are allowed to replace strikers with non-union members and non-striking union members of the same company, but the revised law will disallow the replacement of striking employees with subcontracted employees.

A flexible work hour system
Under the employment regulations, a flexible work hour system on a biweekly basis can be introduced. Working hours shall be allowed to be extended up to 48 hours a week on condition that the maximum working day does not exceed 12 hours and the average working week does not exceed 44 hours.

When a written agreement between labor and management is reached, a flexible work hour system on a monthly basis can be introduced. Working hours can be extended up to 56 hours a week under condition the working day does not exceed 12 hours and the average working week does not exceed 44 hours.

For example, if employees work 54 hours in the first week and 34 hours in the second week, the total working hours are the same as if they worked 44 hours for the two weeks, for a total of 88 working hours. But the wages are less. Under the old system, they would get extra pay for 10 hours of overtime, because they would have been recorded as working 10 hours over the standard 44 in the first week. This article does not apply to workers between 15-18 years of age and pregnant female workers. The amended law stipulates that employers shall take measures to maintain the current wage and benefit levels.

Part-time workers
Rules for the protection of part-time workers were also prepared. The amendment declares that companies shall take steps to raise the job security and welfare for the part-timers, in light of the increasing employment of such workers.

Terminating employees
From 1999, businesses may be able to terminate employees in cases of necessity, for example, under threat of bankruptcy, to regain competitiveness or to eliminate redundancies due to automation. As long as the reduction of employees is made in accordance with the pre-announced rule, the employer would not need the approval from a committee of the Labor Ministry. And employees can take legal action against management when they are fired for reasons not stipulated in the law.

Severance pay
The current payment system is changed, allowing workers to receive, through agreement with management, accumulated severance pay. By receiving the severance pay in advance, workers can use lump sum money for buying homes and for other personal purposes while continuing to work for the company. Management can save by settling the severance pay midterm. Under the current law, a company with five or more employees must mandatorily pay severance in the amount of one month of average wage at the time of separation.

Guaranteed "fair" dispute and the settlement process
In order to guarantee "fair" dispute and its settlement process, the role of the Central Labor Management will be strengthened. The National Assembly decided to urge the government to upgrade the council in such a way as to be headed by a cabinet minister, one rank up from the current vice minister-level.

The "cooling-off" period
The new labor law calls for shortening the "cooling-off" period to 10-15 days, down from the current 15 days for ordinary firms and 20 days for "public enterprises." The cooling-off period will be renewable only one time. Wage and collective bargaining agreements will be effective for up to two years.

"No work, No pay"
For the first time in the labor law, "no work, no pay" has been be codified. In the revised law, employers have no responsibility or obligation to pay wages during strikes. However, this code is a compromise between management and unions. Management had urged that employers "will be prohibited" from paying wages during strikes. Under the amendment, employers may be permitted to pay wages even during strikes. But unionized workers will be prohibited from starting strikes just to receive wages unpaid during strikes. Violators will be subject to either jail terms of less than two years or fines of less than 20 million won.

No more lifetime job security
With the passage of the new bill at the National Assembly, Korean workers will no longer be insulated by lifetime job security. The so-called layoff system for corporate re-organization has been at the center of the controversy, featuring, among other things, allowing the employers to fire inefficient and redundant manpower in times of managerial crisis. The main purpose of introducing the layoff system is to add flexibility to Korea's labor market and thus enhance the competitiveness of the Korean companies.

Experts in labor-management problems point to the need for both workers and employers to change their perspective to cope with the newly changed law with Western-style conventions in order to see the new law take firm root in the nation and help raise national competitiveness. What is important is not the institution or law itself but how the workers and employers put forth efforts to effectively deal with the changing situation, they say. They cite as examples in this respect the current settlement of labor disputes in companies like Ssangyong Motor Company, and branch firms of the Hyundai and Kia Groups--all with hard-line labor unions.

by Soo-Deuk Sohn