Hankyungyeon "Labor-Management Negotiations Also Difficult Due to COVID-19 Performance Decline... Need to Boost Corporate Vitality"

[Asia Economy Reporter Ki-min Lee] Due to poor performance caused by the novel coronavirus infection (COVID-19) and increasing uncertainty, it has become difficult for domestic large corporations to proceed with wage and collective bargaining agreements (wage and labor negotiations) this year.

On the 21st, the Korea Economic Research Institute commissioned Research & Research, a public opinion polling agency, to survey major large corporations on the 'Current Status of Major Large Corporations' Collective Bargaining and Labor Issues This Year.' The survey found that only 15.0% responded that the wage and labor negotiation process this year is 'smoother' than last year. In contrast, 47.5% said it was similar to last year, and 37.5% said it was more difficult than last year.

Regarding this year's business performance, 54.1% of respondents predicted it would be 'worse than last year,' which is 2.5 times the 21.7% who expected 'improvement compared to last year,' while 24.2% expected it to be 'similar to last year.'

However, even this year, major large corporations face various issues in wage and labor negotiations, including basic salary increases and working hours. Major large corporations responded that the key issues in wage and welfare areas of wage and labor negotiations this year include ▲basic salary increase (66.7%) ▲expansion of welfare benefits (58.3%) ▲performance bonus increase (20.8%) ▲retirement age extension (15.8%).

Among labor sector issues, respondents identified 'reduction of working hours' (60.0%) and 'minimum wage increase' (47.5%) as key points. Amid the spread of flexible working systems due to COVID-19, large corporations pointed out the following as institutional improvement tasks to expand flexible working systems: ▲extension of the unit period and improvement of introduction procedures for the flexible working hours system (68.3%) ▲automatic approval of special extended work in emergencies (42.5%) ▲extension of the settlement period and improvement of introduction procedures for the selective working hours system (31.7%) ▲expansion of discretionary working hours system target tasks (30.0%).

With companies struggling due to COVID-19 and employment remaining rigid, the labor bills that companies are most concerned about are ▲guarantee of severance pay for workers with less than one year of service (Severance Pay Guarantee Act, 50.8%) ▲allowing union membership for dismissed and unemployed workers (Labor Union Act, 28.3%). Among labor bills expected to be proposed in the future, ▲mandatory regular employment for ongoing and continuous work (Fixed-term Employment Act, 30.8%) ▲strengthening conditions for layoffs (Amendment to the Labor Standards Act, 29.2%) were highlighted.

Companies identified the most urgent improvement tasks to enhance labor market flexibility as ▲reforming fair wage systems such as job-based pay (37.5%), ▲easing conditions for managerial layoffs (25.0%), ▲extending the usage period for fixed-term workers (21.7%), ▲expanding industries allowed for dispatch work (7.5%), and ▲formalizing wage peak systems due to retirement age extension (7.5%).

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, emphasized, “The National Assembly and government continue to propose bills that only increase corporate burdens and further strengthen employment rigidity. The only way to minimize the possibility of the unemployment crisis we are currently concerned about is to revitalize companies, which are the main agents of employment.”

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