54% of Foreign Companies View Labor-Management Relations in Korea as Negative for Investment Attraction

[Asia Economy Reporter Kim Hyewon] More than half of foreign companies operating in Korea view labor-management relations in Korea as negative for attracting foreign investment, and a survey found that they plan to increase investment if labor-management relations improve.

The Korea Economic Research Institute (KERI) commissioned the polling agency Research & Research to survey 901 foreign companies in Korea with 100 or more employees (138 companies responded) on their 'Perception of Labor-Management Relations of Foreign Companies in Korea.' The results showed that 54.3% of companies viewed Korea's labor-management relations as negative for attracting foreign investment, more than three times the 16.7% of companies that viewed it positively.

They responded that if Korea's labor-management relations improve to the level of Japan, they would increase their investment scale.

When assuming Korea's labor-management cooperation competitiveness as 100, foreign companies rated Germany at 118.2, the United States at 115.8, Japan at 107.7, and China at 91.1. Among major manufacturing competitors, all three countries except China were seen as superior to Korea in labor-management cooperation.

The biggest difficulties experienced in labor-management issues during business activities were ▲difficulty in employment adjustments such as dismissal and reassignment (37.7%) ▲excessive demands such as union interference in management (26.8%) ▲rigid wage systems (16.7%) ▲lack of consistency in labor-related systems and policies (15.9%), in that order.

Regarding practices that Korean labor unions need to improve, respondents cited ▲combative union activities that refuse dialogue and compromise (46.4%) ▲political strikes linked with higher-level labor organizations (30.4%) ▲strikes where the principle of no work, no pay is not observed (10.9%) ▲practices tolerating illegal union actions (8.7%), in that order.

For establishing cooperative labor-management relations, the top priorities for improvement were ▲strengthening dialogue channels between labor and management (29.0%) ▲reforming the union's struggle-oriented mindset (26.8%) ▲improving labor-related laws and systems (24.7%) ▲changing management's perception of unions (12.3%), in that order.

Regarding areas where the government should focus to improve labor-management issues, building a cooperative labor culture (34.1%) was most frequently requested, followed by enhancing labor market flexibility through deregulation (26.1%), improving labor-related laws and systems and consistent labor policies (24.6%), and strict law enforcement against illegal strikes (13.0%).

Choo Kwang-ho, Director of Economic Policy at KERI, emphasized, "For Korea to become the 'world factory of advanced industries,' which the government is currently promoting, improving labor-management relations is essential," adding, "The government needs to strengthen dialogue channels between labor and management and actively address labor-management difficulties faced by foreign companies in Korea to establish cooperative labor-management relations."

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