Hankyung Research Institute: "Allow Alternative Work and Apply Differential Minimum Wages by Industry"

Announcement of 33 Legislative Tasks in Labor and Environmental Fields to Overcome COVID-19

Korea Economic Research Institute

[Asia Economy Reporter Dongwoo Lee] Key legislative tasks emphasizing labor flexibility, such as allowing substitute labor and applying differentiated minimum wages by industry, have been presented. The argument is that the labor market must be reorganized after the COVID-19 pandemic to strengthen competitiveness.

On the 25th, the Korea Economic Research Institute (KERI) announced "33 Legislative Tasks in Labor and Environment Sectors to Overcome the COVID-19 Crisis," consisting of 25 labor-related and 8 environment-related tasks.

KERI emphasized that to prevent adversarial labor-management relations in advance through a balance of power between labor and management, substitute labor should be allowed and labor disputes within workplaces should be prohibited. They argued that, in preparation for prolonged strikes due to situations like the COVID-19 pandemic, substitute labor should be permitted during workers' strike periods, as is the case in the United States, the United Kingdom, and Japan. The current Labor Union Act guarantees workers' right to strike but completely prohibits substitute labor, thus not guaranteeing employers' right to operate. Additionally, to prevent violent incidents such as facility destruction during strikes, a complete ban on labor disputes within workplaces is necessary, they argued.

They explained that the unit period for the flexible working hours system should be expanded to facilitate the smooth implementation of the 52-hour workweek system. The current flexible working hours system has a maximum unit period of only three months, which causes difficulties in practical use, so they suggested extending the unit period to one year. There was also an opinion that an exception clause should be established to automatically allow special extended working hours in the event of a national infectious disease outbreak.

KERI also emphasized the necessity of freezing and differentiating the minimum wage. Since excessive minimum wage increases have led to job losses among vulnerable groups, they proposed setting the upper limit of minimum wage increases at the average nominal economic growth rate for three years. They added that since uniform minimum wage increases have side effects, it is necessary to apply minimum wages differently by industry and age group.

They also proposed expanding the industries allowed for dispatch work and reforming the wage system. KERI pointed out that the current Dispatch Act limits worker dispatch to 32 sectors such as security, cleaning, and parking management, which hinders job creation, and argued for allowing dispatch in manufacturing and switching to a negative list approach for restricting dispatch industries. Furthermore, they explained that the wage system should shift from compensation based on working hours or seniority to a performance- and job-centered system.

KERI also emphasized rational environmental regulations like those in major advanced countries. According to the current Chemical Substances Control Act, if new chemical substances are manufactured or imported at 100 kg or more annually, up to 47 test data items must be attached depending on the substance, causing significant administrative and financial burdens. They stressed that the registration threshold for new chemical substances should be relaxed to 1 ton or more by referring to advanced countries. Additionally, they advocated for exemption from registration for research and development (R&D) chemical substances to enable efficient R&D.

Choo Kwang-ho, Director of Economic Policy at KERI, said, “Since the COVID-19 pandemic, the domestic labor market has faced serious employment shocks centered on young people, diversification of working hour types, and the issue of strengthening labor market competitiveness to respond to the reorganization of global supply chains,” adding, “Through this announcement, we present institutional measures to overcome the backwardness of the domestic labor market and secure international comparative advantages.”

This content was produced with the assistance of AI translation services.