Labor-management relations  in Korea are changing. The  relations between unionized workers and management have a long history of conflict and struggle, symbolized by walkouts, interference by government, rock throwing, tear gas, iron pipes and  riot rods. However, 18 months after the economy came under the supervision of the International Monetary Fund (IMF), the mood for reconciliation and cooperation between the unions and management is now spreading in workplaces across the country. A relationship based on mutual understanding and partnership for the future development and stability of the country is starting to take hold.

Said the head of a labor union in Buchon, Kyounggi province, "In times like today, it is difficult to be   in the labor movement. Workers demand that the union produce some tangible results, but they are reluctant to participate in union activities. How then can we expect to produce positive results as far as collective bargaining and wage negotiations are concerned?"

According to the union head, labor unions in Korea are in danger of disintegration due to a lack of collective spirit.

In the meantime, progressively more companies are creating conditions for reconciliation between workers and management under the watchword of the so-called "Three Nos," namely, no disputes, no walkouts, and no layoffs. At the end of last year, the labor union of Hyundai Motor's Asan plant, which has long been at the forefront of Korea's labor movement, also declared there had been reconciliation between workers and the management. The move came after the realization that in order to overcome the company's managerial difficulties, it was crucial to guarantee high quality and optimal productivity.

In another development in May, four affiliates of the insolvent Kia Group including Kia Motors, acknowledged that the only way for the companies to survive the difficulties they were faced with was for the union and management to abandon their traditional stance of mutual antagonism and pledge themselves to reconciliation. Accordingly, the four companies declared that they would no longer call for strikes, sending shockwaves throughout the domestic union movement.

Since Korea entered the IMF's restructuring program in return for financial assistance, the number of labor unions that have declared themselves reconciled with management jumped three-fold last year to 1,680 from 610 in 1997. The trend toward reconciliation is expected to continue, marking 1999 as the year of the creation of a new labor-management culture.

A positive sign that hints continuous stability in the labor sector is  that the so-called annual "Spring Struggle" held in April and May ended relatively peacefully despite a seven-day walkout by the subway trade union, enraged by the government-led public sector restructuring program.

There are a variety of factors that have led to such changes in Korea's labor-management relations, including changes in the nation's industrial structure, labor market conditions, and external economic environment to mention but a few. However, the most decisive factor has been the acknowledgement that if workers and management failed to cooperate, it would be hardly possible to overcome the economic crisis.

Implicit in this acknowledgement is the recognition on the part of the unions that the position of the national economy is sufficiently perilous that negotiations for wage hikes are no longer important. Rather, the imperative now is that workers must cooperate with management to save their companies in order to save themselves. Thereby, the two sides have sought a new paradigm that allows for co-existence.
For example, according to a survey conducted by the Korean Confederation of Trade Unions (KCTU) in December last year among unionized workers, even union leaders acknowledge the  difficulties that their companies are facing and are refraining from demanding wage hikes. The survey also revealed that 58.1 percent of the respondents replied that they would accept a wage freeze conditional on minimum layoffs. In contrast, only 4.9 percent answered that wage hikes were absolutely necessary.

In addition, the survey revealed that more than half the respondents admitted the necessity of restructuring albeit accompanied by layoffs. Furthermore, a surprising 65 percent answered that staging walkouts were inappropriate even in the case of discord with management. The results of the survey demonstrate that there has been a clear change in the mindset of workers in the wake of the economic crisis.

The change in the attitude of workers is also apparent at the negotiating table. The union and the management of a certain company located in Kumi, Kyoungbook province, needed just a single round to reach an agreement at this year's negotiations. The two sides found middle ground in no time regarding the workers's demands for job stability and the employer's demand for a wage freeze, a startling contrast to the situation in 1997 when the union staged a protracted strike.

Says the leader of the trade union; "The repercussions of the 1997 strike had considerable adverse effects on both the management and the workers. Knowing the consequences, we agreed with the management to  set aside wage hike issues until  after year 2000 so that the company  can concentrate solely on further growth." His remarks amply portray the new trend at the bargaining table - asking for job stability rather than wage hikes.

The second factor that has facilitated the mood for reconciliation in labor-management relations is the change in the domestic industrial structure. The development of information and telecommunication technology is a driving force in rapidly increasing the proportion of high-tech industry in the overall economy. Small-scaled venture start-ups are also mushrooming at a rapid pace.

The process of these changes has made the younger generation the major participant in shaping corporate culture. This new generation places more importance on substance rather than form and prefers individualism to collectivism. They seek freedom and lack the collective  spirit, and thereby maintain a flexible attitude toward union activities.

A third factor that is driving the transformation of labor-management relationship is the changes in the supply structure of the labor force. The most formidable change is the increase in the proportion of highly educated personnel and women in the workforce. Already, 99 percent of Korean workers are high school graduates and more than 50 percent have college degrees, a remarkable increase compared to 1970 when the figures stood at 70 percent and 27 percent respectively. The increase in the participation of women in the labor market is also notable. At present women comprise almost 50 percent of the workforce, as compared to less than 40 percent in the 1970s.

The increase in the participation of highly educated workers and women in the economy is a direct reflection of the distribution of jobs. The proportion of manufacturing jobs in the economy is decreasing while the  proportion of white-collar positions in manufacturing businesses is surging rapidly. Due to these trends, the  chief arena of labor-management relations is no longer the factory floor. As a result, relations between the two sides are becoming more stable, democratic and cooperative, less antagonistic. Overall, the changes reflect the impact of a greater number of women in the workforce that in general is becoming more educated and less likely to seek conflict as a means of resolving disputes.

A fourth factor is changing public attitudes toward industrial action by unions. According to a survey undertaken by the Hankook Daily Newspaper in the last week of May and the first week of June and published June 9th, unions calling strikes can expect far less sympathy than before. The survey of journalists, bureaucrats, academics in business administration and economics, and the general public indicated a majority was opposed to strikes. The only dissenting group was academics in the field of politics and social science, who favored strikes as a negotiating measure by 61.9 percent to 33.3 percent.

The final factor in the creation of a new labor-management culture is the trend toward globalization. The forces of globalization have brought about an era of cutthroat competition, where the only alternative to survival is to respond flexibly to the changing external environment.

In an effort to survive in the age of limitless competition, Korean companies are readjusting their production methods and corporate structures to increase flexibility. In this regard, the principle of competition is also applied to the management of personnel, specifically wage setting, which has had a direct impact on  the relations between labor and management. The forces of globalization  offer Korea no other alternative than  to sharpen its competitive edge so that it can compete and win in world markets. Consequently, it is imperative that the relationship between labor and capital also transforms itself to accommodate new global realities.

In contrast to developed countries such as the U.S. and Japan, which have a long history of labor movements and where cooperative relations between labor and management were successfully established earlier, Korea is only in the initial stages of reconciliation between the two parties.  The underside of the success of the Korean economy, which grew remarkably without a single instance of downturn from 1970 to the crisis of 1997, has been a history of conflict and struggle between labor and management. However, now that the country is in economic crisis, unions and management now realize they must follow their American and  Japan counterparts in discarding confrontation and developing more cooperative and productive relations as means of their mutual survival in an increasigly competitive world.

Samsung, the nation's second largest conglomerate that maintains a "no-trade union policy," recently produced a television program on the success of LG Electronic's efforts to reach an agreement in its wage setting negotiations, portraying it as an excellent example of cooperative, non-confrontational relations between workers and management. Samsung aired the program to its employees and  staff under the title, "Labor-management Culture - the Basis for Competi- tiveness." The move by Samsung demonstrates how important labor culture is in shaping a company's future.

 

 

The Role of the Tripartite Committee and the Creation of a New Labor-management Culture.

The Tripartite Committee, consisting of the representatives of labor unions, management, and the government, was officially struck in January 1998. The committee was established to act on the proposal of then president-elect Kim, Dae-jung to set up a body that would represent a break with the acrimony of the past and seek new directions to overcome the economic crisis.

Just one month after its establishment, the committee announced its "great tripartite compromise" after reaching an agreement on the most sensitive issues such as the legalization of layoffs, the dispatch of workers, and allowing the political participation of union members. The compromise demonstrated the formation of a consensus regarding the necessity of sharing economic pain among all the parties represented on the committee in order to overcome the national economic crisis.
However, lack of experience in maintaining the unity among the parties, excessive expectations from the unions, and excessive anxiety on the part of both management and the government hindered the committee from taking root on firm ground.

As restructuring began in earnest in the financial and public sectors, disputes arose between labor and management, aggravating conflict among the participants of the Tripartite Committee. Consequently, it is now faced with the danger of dissolution after the Korean Confederation of Trade Unions (KCTU) formally left the committee while the Federation of Korean Trade Unions (FKTU) postponed its initial plans to join.

According to the committee's labor panel, the government pushed ahead with restructuring unilaterally without implementing the points jointly agreed to by all three parties. Thereby, it sees no point in participating in future talks. If this is the case, then the Tripartite Committee is failing to fulfill its role and in essence, is demanding that only labor shoulder the burden of restructuring.

In response, Kim Won Bae, the director-general of the Tripartite Committee and who represents the Labor Ministry, said, "It is absolutely impossible for any of the committee's economic participants to avoid the pain entailed by restructuring. Furthermore, there is no other country in the world that succeeded in accomplishing such massive reform without pain".

Mr. Kim went on to say, "The whole purpose of launching the committee was for the concerned parties to establish their rights. The government had no intention of unilaterally implementing its restructuring policies, If we had applied market principles to the process of restructuring, the unilateral implementation of the related policies would have left the workers to suffer all the pain".

In reality, the Tripartite Committee has faithfully fulfilled its role of promoting job stability and cooperation between labor and management, implementing the agreed points, and relieving social tensions.

In retrospect, without the committee, conflict between labor and management would have prolonged the period of recovery of the foreign debt crisis and it is highly likely that Korean society would have had to pay an additional price in the process.

Over the last year, there have been an increasing number of unions that have agreed to wage freezes while compromises have been achieved regarding job stability in exchange for acceptance of the deterioration of working conditions. The spread of the mood for reconciliation and cooperation between labor and management was possible because the Tripartite Compromise laid the necessary foundations.

However, this is only the beginning. Economists and industry watchers advise that this year is crucial to the future development and prosperity of the country. To overcome the current economic crisis and truly join the ranks of Western industrialized countries, Korea must finalize the process of restructuring at an early date and consolidate its economic recovery. To that end, it is imperative to create a new labor-management culture based on dialogue and cooperation.

A labor-management relationship based on reconciliation and cooperation is the new paradigm that the Tripartite Committee is working towards, and its achievement is fundamental to the new labor-management  culture. The government, for its part will implement a variety of policies to enable the new culture to develop in the domestic industrial workplace.

To that end, the government plans to elevate the status of the Tripartite Committee. It will facilitate the role of the tripartite negotiation panel and promote the readjustment of related practices, institutions, and mindsets.  At the same time, it will take the necessary steps to promote a rational approach to enable bargaining based on self-control and responsibility to take root, while pursuing job creation policies to solve the unemployment problem.

Compared to Western industrialized countries such as the Netherlands or Sweden that take pride in a long history of democracy and cooperative relations between labor and management, Korea lags far behind. For these reasons, there are some that give Korea high scores simply for launching the Tripartite Committee successfully.

 

 

By Kwan Seok Lee