Social Dialogue and Labor Governance

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					           Social Dialogue and Labor Governance

                                     in Korea

                                            Prof. Hyug Baeg Im

                                   (Department of Political Science, Korea University)

1. Introduction

Ladies and gentlemen. It gives me tremendous honor to talk about social dialogue and

labor governance in Korea at the general meeting of this prestigious International

Association of Economic and Social Councils and Similar Institutions.

In the 20th century, Korea achieved rapid industrialization in a short period of time.

However, the process of rapid industrialization gave birth to poor industrial relations.

The authoritarian regimes of the 1970s and 1980s did not recognize the basic rights of

workers and engaged in extensive crack down on trade unions. Such lost workers'

rights have been reinstated since the democratic transition in 1987, and workers have
been able to decide their wage and working conditions through collective bargaining.

However, the outpour of collective actions by these workers left industrial relations in

Korea very confrontational in nature and made the relations something that are beyond


The Kim Dae-Jung administration that emerged amidst the economic crisis of the late

1997 tried to stabilize industrial relations by engaging in tripartite social dialogue. An

important breakthrough was made to overcome the economic turmoil with the

establishment of the Korea Tripartite Commission (KTC) of labor, management, and

the government, and its Social Pact to Overcome the Economic Crisis on February 6

1998. Since then Korea has witnessed various changes in industrial relations. With

tripartite social dialogue becoming institutionalized on national level, labor and

management are making their voice heard in the government's public policy making.

'The Participatory Government' of president Roh Moo-Hyun has also tried to engage in

social dialogue and develop a socially inclusive industrial relations. Although the results

from such attempts are yet to meet the expectation, hope is growing that social

dialogue would become active again with the Korean Confederation of Trade
Union(KCTU) promising to return to social dialogue and employers' organizations

expressing positive interest on social dialogue.

In this presentation, I will, first, track at labor governance under authoritarianism

followed by the changes and reforms of labor governance since the democratic

transition in 1987. Second I will look at the process that led up to the Social Pact on

February 6 1998 under Kim Dae Jung administration. Third, I will discuss the attempts

that have been made under the President Roh's administration to overcome stalemate

in social dialogue, and search for the ways to make it active in Korea.

2. Labor Governance under Authoritarianism

Labor governance under authoritarianism was characterized by labor containment by

the state. The authoritarian regime of president Chun Doo-Hwan back in the 1980s

relied on 'labor repression by market mechanism'. According to professor Samuel

Valenzuela, there are two strategies adopted by authoritarian regimes to contain labor.

(Valenzuela, 1989). First is 'corporatist containment strategy' in which the state
unionizes workers top-down, and controls them via government officials or labor

leaders de facto appointed by the state. The other is 'market containment strategy' in

which the state employs all the means possible to suppress any unionization attempt

by workers and drive them individually to face market conditions. The state endeavors

to weaken the existing trade unions, decentralizes collective bargaining efforts, and

deprives workers of their right to strike. In order to achieve these aims, the state allows

union busting by corporate management, made strike illegal in 'strategic industries',

and prevented trade union from using strike funds.

The Chun Doo-Hwan government (1981-1987) adopted the latter approach (market

containment strategy). The Chun administration contained the formation of trade union

as much as possible and clamped down on existing unions that did not comply with

government's policies, while legally enforcing decentralized company unionism. It also

forbade workers' participation in politics while blocking them from seeking solidarity

with a non-corporate third party such as students, antigovernment activists, and

opposition party. Workers were not allowed to pursue collective interests and they were

only permitted to compete individually in labor market.
While many authoritarian regimes in Latin America controlled workers by unionizing

them top-down using corporatist containment approach, authoritarian regimes in Korea

employed 'repression by market mechanism' and made workers de-unionized,

demobilized, de-politicized by throwing them into market isolation.

3. Labor Governance in Post-1987 Democracy

A great compromise was reached for democratization on June 29, 1987 after a lengthy

'tug-of-wars' between authoritarian regime and democratic opposition. However, this

compromise could be seen as a 'political pact' for democratization, containing no actual

promise for social and economic democratization. This bred workers' discontent, who

took to the street to protest against labor containment. They demanded wage hike,

improvement of working conditions, and the right to organize democratic union. A total

of 3337 strikes broke out during 'the Great Workers' Struggle' involving more than a

million workers, and this three months long walkout gave birth to 1278 new unions.

Shocked by this unprecedented massive outburst of workers' demand, the government

revised labor laws in a way that accommodates their demand. The revised law of
November 1987 has become the framework for industrial relations in the post-

democratic transition period and endowed workers with a minimum level of freedom of

association. First, the formation of trade union became easier. Regulations on the

formation of unions were lifted while the rights to dissolve union and the right to order

improvement in union leadership were abolished. Union shop was allowed to a limited

extent. Second, workers were allowed to freely engage in collective activities. The

scope of strategic public industries restricting walkout and the extent of activities

banning strike were reduced, while strike restriction period including cooling period was

shortened. However, a freedom to form union was confined to workplace and union‘s

collective action in politics was blocked as the 'three bans' on labor union's political

activities, plural unions and third party's involvement were still kept intact.

The new labor law of 1987 recovered workers minimum industrial citizenship. With the

revised labor law, 'exclusionary repression by market mechanism' was eased and

'market of collective bargaining' took shape. Through collective actions like strike or

other forms of walkout, Korean workers were able to secure exclusive supplier of labor

at least on individual workplace or company level.
Under Roh Tae Woo administration, although past authoritarian practices of militaristic

control over workers had disappeared, a pluralist company unionism continued, to have

repercussions on the society with its negative facets of American-style pluralistic

industrial relations such as low unionization rate, divisive labor movement and high

incident of walkout. Under pluralist company unionism, firm and unions try to maximize

their short-term, self-serving interests at the expense of long term collective interests

such as economic security and growth. Under Roh Tae Woo administration, wage rates

were settled by strikes. High strike rates, lock-outs, police intervention in the workplace

were the costs for adopting such an extreme pluralist labor governance.

Another notable characteristics of industrial relations under the Roh Tae Woo

administration is paternalistic company welfarism. Company, not the state, had served

the role of core welfare giver, subsidizing workers with employee housing, home

mortgage, education expenses, sports and health related amenities. Corporate

managers, in return, demanded workers allegiance to firms by learning organizational

culture, sense of membership, and productionist ideology. However, company

welfarism further widened the welfare discrepancy between employees of large

corporations and small and medium sized enterprises (SMEs), and hampered the
growth of horizontal cooperation between the unions of large companies and     those of


Labor governance that formed after the democratic transition in 1987 was a mixture of

'pluralist company unionism' and 'paternalistic company welfarism'. The labor

governance failed to integrate union workers into the tripartite partnership of labor,

management and the government. Though individual union was recognized as a

legitimate party to collective bargaining unlike it had been under authoritarianism, it

could not have ties with other labor organizations beyond its corporate boundary.

4. Aborted Tripartism

As there was growing consensus that such confrontational, unstable, inefficient

industrial relations were weakening the nation's international competitiveness, labor,

management and the government increasingly tried to solve pending labor issues

through social dialogue and compromise. Attempt at tripartite social dialogue in Korea

can be traced back to the Roh Tae-Woo administration, under which the National

Economic and Social Council, a proto-tripartite committee comprising of labor,
management and the public interest groups' representatives was inaugurated in April

1990 at the request of the Federation of Korean Trade Unions (FKTU). Although

'tripartite talks' were held twice on March 1991 and February 1992, the National

Economic and Social Council failed to win public support because the government did

not directly took part in the talks while rank-and-file workers doubted that the Council

was used as a government's policy tool to control wage hike.

Another tripartite talk was tried by the Kim Young Sam government. Witnessing wage

rate rising really fast and exceeding that of productivity growth, the government and

employers perceived the wage drift a serious threat to export-driven economic growth

model. The Kim Young-Sam government persuaded the representatives of labor and

management to bilaterally decide wage rate through concertation. Thanks to these

efforts, two national level wage pacts were reached respectively on April 1 1993 and

March 30 1994 by the representatives of the Korea Employers' Federation(KEF) and

the Federation of Korean Trade Unions(FKTU).

These wage pacts, however, did not work effectively for containing wage hikes under

the agreed wage guideline because trade unions demanded higher wage rate ignoring

the agreed wage guideline and claimed that their representative body, FKTU, approved
the government's wage rate control policy without their consent. Furthermore,

Chaebols debilitated official wage guideline by compensating workers' loss, whose

wage raise was limited by the guideline, with bonus and incentives.

The Kim Yung Sam government, after the trials of those social pacts, tried to carry out

reforms in labor governance to cushion the blow of the globalization and meet the

global labor standard requirements demanded by ILO and OECD for joining OECD

membership. The reforms were discussed through tripartite consultation of labor,

management and the government.

In order to meet the demands of globlaization for falexible labor market and those of

democratization of industrial relations, the Industrial Relation Reform Commission

(IRRC) officially kicked off on May 9 1996 including the Korean Confederation of Trade

Unions(KCTU), an illegal labor organization at that time, the Federation of Korean

Trade Unions(FKTU), the Korea Employers' Federation(KEF), and the representatives

of public interest. However, fierce difference between labor unions and employers over

the issues like plural unions, union's entry into politics, a third party involvement, and
flexible labor market that have surfaced since IRRC's inauguration resulted in the

KCTU's withdrawal from the Commission on October 1.

After the incident the Commission submitted draft reform plan based on the proposal of

the representatives of publc interest to the president. Amended proposal of new labor

laws, which came into being after so many difficulties, was something that favored

employers' interest too much. It approved all the actions demanded by employers to

strengthen flexible labor market, such as flexible layoffs, flexible working hours,

substitute labor during walkout, no wage for full-time union officials by 2002, and 'no

work, no pay' during strike. But the amended law deferred the adoption of plural unions

and third party involvement and only permitted political activities of workers. Worse yet,

this amendment was further revised to serve employers' interest and rammed through

the National Assembly by ruling party members only, amidst strong protest by angry

labor unions. Unions in 1997 staged the most violent general strike since Great

Workers' Struggle of 1987. Initiated by KCTU, the strike was immediately joined by

FKTU and social activist groups and escalated into the most massive nationwide social

protest since the democracy movement of 1987. The incident enabled grand coalition

of labor movement and democracy movement for the first time since 1987, and forced
the government and employers to amend the law in a way that incorporates workers'

demand. Succumbing to the mounting pressure, the government promised labor law

reform based on the agreement between ruling and opposition parties, and the newly

revised bill passed the National Assembly on March 10, 1997. The revision helped

labor activists to enter politics and set in place institutional framework to guarantee

labor flexibility.

5. Korea Tripartite Commission and the Social Pact of February 6, 1998

Tripartism in earnest started with the economic turmoil of late 1997. The first priority of

president Kim Dae-Jung that took office amidst the unprecedented financial hardship is

to steer the nation out of the crisis. However, the solution was beyond his choice and

was imposed by the IMF which provided emergency relief loans to Korea. Its

prescription was simple: neo-liberal economic restructuring, which contained the

requirement for flexible labor market.
President Kim Dae Jung who needed workers' votes to win the election opposed during

the election campaign the introduction of flexible labor market and pledged to

renegotiate the terms of IMF's prescription if he's elected. However, after winning the

presidential election he changed his stance and made an official promise to faithfully

meet the terms of IMF. He aggressively pursued stabilization policy and neo-liberal

economic restructuring as demanded by IMF. The most politically sensitive challenge in

that reform effort is the adoption of flexible labor market since it could bring strong

resistance of workers, his staunch political base. Faced with this dilemma, President

Kim realized that it was impossible to have flexible labor market without the support of

workers who proved their power with the General Strike in 1997, and thus established

the Korea Tripartite Commission (KTC) of labor, management, and the government on

December 26, 1997 to search for answers to tide over the crisis by tripartite social

dialogue. (KILF, 1998: 5)

In the beginning labor unions turned down President Kim's offer claiming that they have

no reason to get involved in the KTC designed to promote flexible labor market. But he

convinced them by emphasizing that he had been their friend for four decades and

promising to have business to fairly share the burden of restructuring. Han Gwang-Ok,
a chairman of preparatory committee for Korea Tripartite Commission pledged that he

would include when and how to introduce flexible labor market in the agenda of the

KTC. With KCTU, which put up resistance to the last minute, expressing its willingness

to take part, 'the Korea Tripartite Commission to Overcome Financial Crisis' was

launched on January 15, 1998.

The commission was made up of 11 members, Chairman of KTC Han Kwang Ok,

chairmen of two peak labor federations, KCTU and FKTU, chairmen of two peak

business associations, KEF and FKI, the Minister of Finance & Economy, the Minister

of Labor, and four political party leaders. Compared with Industrial Relation Reform

Commission of Kim Young-Sam government, the commission included government

officials who are capable of keeping the agreements of the commission and turn them

into actual policy, and representatives of political parties who can potentially enact

them into law. In terms of representativeness and implementation power, the new

tripartite organization was much advanced one than its predecessor.

On February 6 1998, the Commission put forward the social pact to tackle the

economic crisis, which contained adoption of flexible labor market, and on February 13,
ruling and opposition parties' policy makers quickly enacted it into a law. 'The Social

Pact of February 6' put in motion the system that made it easier to undertake corporate

and financial restructuring through the injection of substitute labor, and successfully

gave conviction to the international financial markets that the restructuring efforts would

succeed, which made the Wall Street to agree on rolling over the matured loans and

converting short term to long term loans. With this regained confidence in Korean

market, international capitals started to flow in again, helping Korea to overcome short-

term credit crunch and embark on long-term restructuring efforts.

Korean tripartism that was formed in the aftermath of financial crisis has some

noteworthy characteristics.

First, it was what Hemerijck called 'innovative corporatism', which emerges when there

is high social support for social dialogue even though the extent of institutional

integration is low (Hemerijik, 1995: 194). Social Pact of February 6 was innovative in

the sense that Kim Dae Jung government found out a corporatist solution to labor

market rigidity despite organizational structure of industrial actors, industrial culture,

and political configuration were unfavorable to corporatist compromise. The Kim Dae
Jung government forged a tripartite compromise only with the help from strong public

pressure for finding ways out of crisis.

Second, it had the characteristics of 'crisis corporatism' which was designed to tide

over the economic crisis. Corporatism during the Keynesian golden era in Europe was

mostly about plus-sum game type of compromise among industrial players in time of

rapid growth. In this game, trade union refrained from demanding wage rate hike in

return for increased welfare from the state and increased investment from the business

that would create more jobs, more total sum of workers' income, and more tax

revenues to the state. The increased tax revenues benefited the workers in the form of

expanded welfare. Compromise was reached in a way that benefits all the players of

the game.

In contrast, at the time of economic crisis, industrial actors try to minimize losses and

costs. Unions try to minimize job losses, firms minimize labor costs, and the

government minimizes spending. Crisis corporatism focuses on employment while

growth corporatism's main point of departure for compromise is wage restraint. At the

time of economic crisis, compromise is made at the point of minimizing total sum of
losses under the given conditions. Unions face to choose between minimum loss of

employment in exchange of wage concession and accepting mass layoffs by plant

closures. In the case of crisis corporatism, the game of class compromise is unstable

and asymmetrical in which unions are in disadvantageous position vis-a-vis

management. Therefore, as soon as the moment of crisis is over, actors, unions in

particular, have strong incentive to defect from the pact of compromise.

In the Social Pact of February 6, 1998, workers shouldered most of costs of

restructuring, that is flexible layoffs. Faced with the choice of unilateral layoffs or

coordinated layoffs with indirect return from the government in the form of social safety,

welfare, employment program and industrial citizenship, the unions chose the latter

through the participation in the tripartite compromise. Under crisis corporatism,

minimization of the costs is the dominant strategy of unions.

Lastly, the tripartite body under president Kim Dae-Jung was a 'government-led

corporatism.' The government initiated the organization of the KTC and led the

deliberation meetings of the KTC.    Among the 90 issues agreed in February 6 Social

Pact, 70 were policy issues that the government had to make them into law and
implement them.      Government's participation in the KTC can be deemed to have

positive effects on implementation and enforcement of tripartite agreements because

the government had the power and authority over labor and management to comply

with the agreement. However, too much reliance on the government would impair the

autonomy and the neutrality of the Korea Tripartite Commission.

                     Table 1. Activities of Korea Tripartite Commission

      Duration     Legal Ground           Participants                      Key Agenda

Phase Jan15      political consensus   labor, management, flexible labor market,

  I   1998       body with no legal     the government,     basic   labor    rights,   social   welfare

      - Feb 9         ground            political parties   policy, Chaebol reform

        June3         presidential decree labor, management,

Phase 1998            (The decree on the the government, public restructuring, social welfare policy,

  II     -     Aug     establishment of       interest, political   basic labor rights

        31 1999             KTC)                   parties

                                                                    restructuring, social welfare policy,

                        The Act on the       labor, management, working hour reduction, job creation,
Phase Sep         1
                      establishment and the government, public resolution         of    social   bipolarization,
  III   1999 ~
                      operation of KTC             interest         improvement of industrial relations


Source:        'Studies     on   the      Activities   and    Direction      of   the     Korea      Tripartite

Commission(KTC)', 2003, Lim Sang-Hoon, Cho Sung-Jae, Yoo Beom-Sang, Chang


The critical agenda of the first phase KTC is the establishment of flexible labor market,

basic labor rights, social welfare policy and Chaebol reform. Players agreed on 90

issues in the Social Pact of February 6. However, in the first phase, the KTC had

limitation of insufficient institutionalization. It was founded by president-elect Kim Dae

Jung without any legal ground out of necessity to tackle the economic adversity. In

addition to the insufficient institutionalization, the fact that the KTC was created under

the conditions that lacked political, industrial, and cultural environments necessary for
the tripartite social dialogue proves that the first phase of the KTC is a typical

innovative corporatism.

The second phase KTC that was launched in April 1999 expanded tripartite social

dialogue over the issues of restructuring of all sectors of the economy, including

finance, public and corporate sectors. Labor groups raised issues with the basic labor

rights agreed during the first phase such as the legalization of teachers' union, and the

permission for the unemployed to join unions. The representatives of public interest

participated in the second phase KTC to mediate differences among labor,

management and the government and ensure professional discussion. And in the

second phase, the KTC upgraded its legal status by a presidential decree to convert

the KTC from a tentative body to an presidential advisory organization.

The third phase KTC, which kicked off in September 1999, has dealt with agendas

such as 'working hour reduction', 'problems of non-regular workers, and other industrial

relations issues. Though discussion was made on restructuring and social policy, most

of the talks have been centered on measures to improve industrial relations system.

The third phase KTC is in operation for relatively long time (it commenced in
September 1999 and is still in existence) and has gained a                stronger and permanent

legal status of social dialogue institution owing to the enactment of 'the Act on the

Establishment and Operation of KTC.' However, it is not running smoothly due to

passive attitude of the government and the business circle, and non-participation of

KCTU. Viewed from this perspective, the second and the third phase KTC are more

institutionalized but enjoy less social support.            In that sense, they can be called an

'immobile corporatism'.

Table 2. Types of corporatism in terms of social support and institutional integration

                                   Social support

                                      +                             -

                            Responsive corporatism Immobile Corporatism

Institutional integration

                            Innovative Corporatism
                                                     Corporatist Disengagement

Source: Hemerijck (1995)

6. Social Dialogue under President Roh Moo Hyun's Participatory Government

(1) Jobless Growth and Economic Bipolarization
Korean economy under president Roh Moo Hyun's administration is transforming from

manufacturing-based economy of industrialization era to knowledge-based economy of

knowledge and information era. Government's drive to build knowledge and

information-based economy, which began during Kim Dae Jung government, has

continued in the Participatory Government of Roh Moo Hyun, turning Korea into a

leader of IT revolution.

Even though IT revolution in Korea has provided the growth impetus in the post-

financial crisis period, the rapid growth of IT-based technology intensive industry has

led to a decline of labor intensive industry, resulting in bipolarization of manufacturing

sector. Also this development has brought about 'jobless growth' or 'growth with low job

creation', in which economic growth does not entail corresponding rise in employment,

a problem encountered by advanced economies in Europe.

But we cannot say IT revolution is the sole culprit of 'jobless growth'. Other

fundamental issue is a rigid labor market in which strong unions in Chaebol companies

and public sector have tried to be guaranteed both high wage rate and job security.
The rigidity of labor market makes it difficult to increase the employment of regular

workers. Worse yet,       because of sluggish domestic demand in massive job creating

service sector has weakened the ability of the Korean economy to generate


The other biggest challenge facing capitalism in Korea is bipolarization of labor market

induced by increase in non-regular workers.1)

The number of non-regular workers has climbed steadily since the financial crisis, from

46.9% in 2001 to 47.5% in 2002 and 50% in 2003.             As of 2004, labor sector

sees 56.3% of total workers as non-regular workers while the Ministry of Labor puts

the figure at 32.6%. 2)

The root cause of such increase could be traced back to the Social Pact of February 6

1998. Although the gist of the pact is to introduce flexible labor market through layoff

and dispatched worker system, it could not be implemented as planned because it

faced fierce opposition from the unions of large corporations and public sectors.

Chaebol companies try to find a roundabout way to address labor rigidity by increasing

the percentage of non-regular workers.
While employers prefer hiring non-regular workers on the ground that they can easily

adjust employment and keep labor cost to a minimum, problems faced by non-regular

workers are serious. Their wage is only 40~80% that of regular workers while they

normally have to work lengthy hours, exceeding the limit set by employment contract.

Also a majority of them are not covered by the benefits of four national insurances

(employment insurance, health insurance, industrial accident compensation insurance,

national pension).

(2) Social Dialogue under the Participatory Government

The Participatory Government of Roh Moo Hyun, which took office with the slogan of

'socially inclusive industrial relations', has worked to revitalize stagnant KTC and

sluggish social dialogue. On June 21 2003, shortly after the inauguration, it launched

'Commission for the Development of Industrial Relations' and proposed five policy

tasks - the establishment of tripartite cooperation system, the expansion of regional

and sectoral level social dialogue body, the making of high performance workplace, the

institutionalization of industrial relations of public sector, and the development of
advanced institutional and legal industrial relations system - to take industrial relations

a notch higher.

At labor-management relations talks hosted by the president Roh Moo Hyun on May 31

2004, participants agreed to have 'Tripartite Representative Meeting'. The meeting was

aimed at finding measures to upgrade the system of industrial relations law and to

renovate the KTC. The meeting was held twice in June and July of 2004. Then,

meetings became crippled as the KCTU refused to get involved. But as the KCTU

returned the Tripartite Representative Meeting since the 6th meeting on July 6 2006,

the Meeting currently has been reinvigorated into a public forum that many key

industrial relations agenda and long-term tasks are being discussed in earnest.

On the other hand, the KTC succeeded in making 'Social Pact for Job Creation' (or

February 8 Social Pact) on February 8 2004. The pact, which consists of 55 key policy

items, is an expression of the tripartite compromise and agreement to address social

bipolarization by creating jobs through the provision of job security, wage moderation,

labor-management cooperation, and the government assistance.
Various other types of social dialogue have been sought by the Participatory

Government. A case in point is the government's proposal to hold 'Joint Meeting

for Grand National Unity' on October 12, 2005 involving representatives of business,

labor, women, civil society, religion, and political parties.

Nonetheless, in overall social dialogue under the Participatory Government is at

stalemate. Industrial relations at individual company level in general is stable thanks to

the government's refraining from making any unnecessary intervention since 2004

according to its principle of having labor and management solve disputes bilaterally

without government's involvement. However, speaking of industrial relations beyond

individual company level, disputes and conflicts about non-regular workers are on the


(3) Why Is Social Dialogue Lacking under the Participatory Government?

Why is there not enough social dialogue under Roh Moo Hyun government? The blame

goes to all the main players of social dialogue, unions, business, and the government.
First, unions are facing the crisis of representation because of internal division and

weak leadership. The growing division of peak labor federation between KCTU and

FKTU are casting doubt over whether they can truly represent the voice of labor.

Furthermore these peak organizations have problem of weak leadership that cannot

properly control its member organizations. The KCTU especially lacks control over

large Chaebol company unions and industrial union federations. It also suffers from

internal infighting. To make things worse, big unions of Chaebol companies that have

strong bargaining power are reluctant to make concession required for social

compromise and thus limit the chance of KCTU leadership to take part in social

dialogue on its own.

Second, after winning concession on labor market flexibility and business restructuring,

employers have turned to be passive toward social dialogue. The agenda of social

dialogue is put on a back burner as they focus on neo-liberal corporate restructuring

such as global sourcing, outsourcing, and overseas relocation in order to cope with

changing business environment in the era of    globalization.
Third, the government failed to provide vision and leadership necessary for grand

social compromise to ease social bipolarization, even though it successfully managed

industrial relations at individual workplace.

7. Outlook of Social Dialogue in Korea: Where Should It Go?

Globalization, IT revolution, and democratization are demanding an overhaul of the

framework industrial relations in Korea. Globalization and IT revolution have generated

an asymmetrical industrial relations as they have produced jobless growth which in turn

increases the bargaining power of management and weakens that of labor. On the

other hand, the spread of democratization is adding pressure to make industrial

relations more democratic. What all these mean is that the great compromise of labor,

management and the government is the only solution for making win-win labor-

management relationship out of current industrial confrontation and disputes.

The recommeded future directions for social dialogue in Korea are the following.
(1) Supply-Side Corporatism

First, triparte social dalogue in the era of globalization and IT revolution must develop

into a supply-side corporatism. The key industrial issue at this point is not searching a

compromise solution to ease wage pressure while sustaining growth with full

employment that demand-side corporatism has attempted so far. The key issue in era

of globalization and IT revolution is whether we can keep and create good jobs amidst

growing capital mobility and massive labor saving.

In contrast to demand-side corporatism that was popular in Europe back in the 1970s,

supply-side corporatism     focuses   on   raising flexibility   of   labor market   and

competitiveness of firms. Supply-side corporatism is a good reflection of the shift in

power between labor and management with the advent of the globalization.       Since the

1980s as flexible labor market and decentralization of collective bargaining power has

weakened unions' bargaining strength, labor-management dialogue centers on

promoting the smooth supply of production elements such as capital investment and

labor supply.3)
The key issue of social dialogue in Korea is that of keeping good jobs and creating new

ones amid growing capital mobility and massive labor saving by IT revolution.    What

Korea needs now is creating and keeping jobs to stop the 'hollowing out' of

manufacturing sector and allocating jobs adequately between regular and non-regular


(2) Responsive Corporatism

Second, social dialogue in Korea should develop into a 'responsive corporatism' in

which the tripartite social dialogue body enjoys both high social support and high

degree of institutional integration. Viewed in this light, Democratic Labor Party which

successfully entered into an institutional political arena and became the third largest

party with the help from the introduction of proportional representation, has to play a

leading role in transforming labor movement from a mobilizational movement to a

responsible industrial actor. Democratic Labor Party must persuade the KCTU that

controls big unions of Chaebol companies to end its militant, uncompromising, hostile

labor activities and to take social responsibility that befits its enhanced power and

influence. The KTCU should feel responsible for the increasing discrepancies between
workers of large Chaebol companies and those of SMEs (small and medium

companies), and between regular and non-regular workers, and try to address them.

Big monopoly unions of large companies must not pass on the costs of restructuring to

a third party. They must join job sharing with non-regular workers by easing wage

hike and rigid layoff terms and conditions, and make concession to non-regular workers

so that they too can benefit from company welfare.

Big business, on their part, must work harder to gain trust from labor and the people. It

should build trust by practicing transparent management, ethical management,

democratization of corporate governance, and information sharing. Doing the social

responsibility of 'good corporate citizens' is necessary for big business to enter into

social dialogue with other industrial actors.

(3) Multi-level, Decentralized Corporatism

Finally, tripartite social dialogue in Korea should be multi-level, decentralized

corporatism. To meet the demands of globalization, decentralization, and localization,

there must be a division of labor among various social dialogue bodies at different
levels such as a national social dialogue body, KTC at macro level, regional and

sectoral social dialogue bodies at meso-level and labor-management consultation

committee at micro level.

At the national level, the KTC must address macro social and economic issues like

enacting law on non-regular workers, industrial relations law, and road map for

industrial relations. The KTC has to initiate social dialogue among industrial actors to

achieve social integration by means of easing bipolarization.

At meso level, industrial sector council must be established to discuss the agenda of

reducing gap between big business and SMEs, and developing human resources at

SMEs. Also regional social dialogue body comprised of local government, firms, unions,

local civil associations and universities needs to be formed to lead the revitalization of

local economy, local job creation, and the establishment of local welfare community.

Regional social dialogue body can arrange terms of employment and working

conditions at local level, conduct longer-term vocational education and training, build

lifetime learning system for workers to reduce skill gaps, and lead job training for

unemployed workers.
Finally, at micro level, intra-company labor-management consultation committee must

be activated in order to forge innovative labor-management partnership at workplace.

Labor-management consultation committee at workplace must work on adjusting

working hours, maintaining employment, and activating vocational education and

training at workplace so that it can build labor-management partnership at workplace

level. Yuhan Kimberly Co. is a good example of successful micro corporatism. It has

kept the total number of employees intact by changing from three team shifts to four

teams-two shifts, and made an rapid increase in both productivity and profit. The

improvements in employment, productivity and profitability created win-win situations

for both workers and management.

These are the recommended directions that Korean social dialogue should go in the

future. Korea is the only country in Asia that overcame financial crisis that spread out

East Asia in 1997 by means of tripartite social dialogue. As Korea showed the world

the role model for rapid industrialization in the last 20th century, I hope, it will make an

innovative model of social dialogue in the 21st century to meet the challenges of

globalization, IT-revolution and democratization.
Thank you.


Korean International Labor Foundation (KILF), 1998. Handbook of the Social

Agreement and New Labor Laws of Korea.

Valenzuela, Samuel, 1989. "Labor Movements in the Transition to Democracy: A

Framework for Analysis," Comparative Politics, Vol. 21, No. 4.

Hamerijck, Anton, 1995. "Corporatist Immobility in Netherland," in Colin Criuch and

Franz Taxler (eds.), Organized Industrial Relations in Europe: What Europe?,

Adlershot: Avebury

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