Labor Law Revision Launched by Kim Jong-in... Business Community Calls for "Rational Reform"

Business Community: "Outdated Laws and Labor Rigidity Reduce New Hiring"
Auto Industry, Suffering from Labor Issues, as a Prime Example
Urgent Need for Regulatory Easing Including Relaxed Dismissal Criteria and Expanded Temporary Staffing Permissions

[Asia Economy Reporter Su-yeon Woo] Kim Jong-in, the Emergency Committee Chairman of the People Power Party, mentioned the amendment of labor relations laws to enhance labor flexibility, and the business community also echoed this, stating that outdated laws are stifling corporate employment and production. Companies point out that excessive employment rigidity inevitably leads to a vicious cycle of reduced new hiring.

The domestic automobile industry is a representative example reflecting the reality of labor rigidity. Hyundai Motor Company halted new production worker recruitment last year. As the era of future cars approaches, the required workforce is decreasing, and the retirement of workers born in the 1960s will begin in earnest from next year. Moreover, by recently introducing a senior contract system that allows workers to work until age 61 in exchange for halving wages, employment stability for workers has become even more solidified.

In the case of Korea GM, which has faced seven consecutive years of deficit crises, difficulties are increasing as the government ordered the conversion of non-regular workers at the closed Gunsan plant into regular employees. There are about 40 related lawsuits, and the company is in a position where it must pay 200 billion KRW in court deposits in cash. At a time when the company must focus on business normalization, labor and litigation risks are tying the company’s hands.

As labor rigidity increases in our society, companies are shifting toward reducing employment altogether. With the rapid rise in minimum wage increasing wage burdens and the introduction of the 52-hour workweek reducing labor time flexibility, companies judge that additional employment could even threaten their survival.

The business community unanimously agrees that outdated laws and systems restricting the autonomy of labor contracts must be overhauled to secure labor flexibility. In particular, excessively rigid employment protection regulations can cause a vicious cycle of reduced corporate employment → increased unemployment → decreased economic growth. To address this, they raise their voices for groundbreaking deregulation, including easing conditions for managerial dismissal, expanding permitted dispatch work, and extending the use period for fixed-term contracts.

First, they argue that the current Labor Standards Act’s dismissal system should be revised to provide grounds for dismissing low-performing employees based on reasonable standards and procedures. Also, the conditions for managerial dismissal specified in Article 24 of the Labor Standards Act should be relaxed from "urgent managerial necessity" to "cases requiring management rationalization measures" to allow companies to pursue organizational flexibility. They also advocate for a significant expansion of the currently limited 32 types of dispatch work to broaden dispatch work in manufacturing. Under current law, changes to employment rules are strictly limited to cases with the consent of the worker group in unavoidable situations, which is also cited as a factor restricting corporate flexibility.

Overseas, bold labor reforms have long been pursued to improve productivity. France has eased dismissal regulations and promoted decentralization of collective bargaining since 2017, the UK has strengthened strike approval voting requirements, and Japan has expanded performance-based compensation systems, confirming improvements in their labor markets.

A representative from the Korea Employers Federation said, "In the era of the Fourth Industrial Revolution, individual workers’ desired working conditions are becoming more diverse, but the existing traditional manufacturing-centered labor law system cannot keep up," and emphasized, "Reforms to enhance the rationality of labor laws are necessary."

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