"This Year's Labor-Management Negotiations Harder Than Last Year, Management Issues Are Minimum Wage Increase and Serious Accident Punishment Act"

This Year's Wage Negotiations More Difficult Than Last Year 25.4% > Smooth 17.7%
Hankyung Research Institute '2021 Major Large Corporations Collective Bargaining Status and Labor Issues Survey'
Main Labor Issues: Minimum Wage Increase (48.5%), Serious Accident Employer Punishment (40.0%)

[Asia Economy Reporter Kim Hyewon] This year, the wage and collective bargaining agreement (CBA) negotiation process among major domestic conglomerates was found to be more difficult than last year. The labor issues affecting business activities were identified as the minimum wage increase and the Serious Accidents Punishment Act.

On the 29th, the Korea Economic Research Institute commissioned the polling agency Research & Research to conduct the '2021 Major Conglomerates Collective Bargaining Status and Labor Issues Survey' targeting the top 600 conglomerates by sales (excluding finance, with 130 companies responding). The results showed that 25.4% of respondents said the CBA negotiation process this year was 'more difficult than last year,' which was 7.7 percentage points higher than the 17.7% who said it was 'smoother than last year.' Meanwhile, 56.9% responded that it was 'similar to last year.'

The Korea Economic Research Institute assessed, "In the second half of this year, as higher-level labor organizations have announced large-scale general strikes and all-out struggles, there is a concern that confusion and conflicts in the industrial field may be greater than expected."

Average Wage Increase Rate: Union Side Demanded 4.2% → Final Agreement at 3.2%

The final agreed average wage increase rate was 3.2%, which is 1.3 percentage points higher than last year's increase rate of 1.9%. The average wage increase rate in companies without unions was 3.3%, slightly higher than the 3.0% in companies with unions. The wage increase rate demanded by unions averaged 4.2%.

When asked about the outlook for business performance this year, 39.2% responded that it would improve compared to before the COVID-19 pandemic, 33.1% said it would be similar, and 27.7% said it would worsen. The Korea Economic Research Institute diagnosed, "In the first half of this year, there were many positive economic outlooks due to the possibility of overcoming COVID-19 through vaccination and pent-up revenge consumption. However, recently, with the resurgence of COVID-19 and increased uncertainty, the atmosphere is such that economic recovery cannot be guaranteed."

Among labor issues, the biggest factors affecting corporate activities were identified as 'minimum wage increase' (48.5%) and 'punishment of CEOs and other executives in case of serious accidents' (40.0%). The Korea Economic Research Institute stated, "The Serious Accidents Punishment Act and its enforcement decree enacted this year are almost unprecedented worldwide and contain many ambiguous provisions, so many companies cited punishment for serious accidents as their top issue."

Amid the recent rise in union strike atmosphere, companies said the following measures are necessary to improve the union's excessive strike practices: ▲strengthening the union's legal responsibility for illegal strikes (56.2%) ▲strict public authority response to illegal strikes (31.5%) ▲complete prohibition of workplace occupation (30.8%) ▲strengthening requirements for initiating dispute actions (26.9%) ▲allowing replacement labor during dispute periods (23.1%) ▲substantial improvement of mediation procedures (20.0%) ▲allowing employers' proactive workplace closure (13.8%). Over the past 10 years (2011?2020), the number of strikes in the second half of the year was more than 2.1 times that of the first half, and the number of lost workdays was 4.3 times higher in the second half than in the first half.

Work Efficiency of Remote Work: Decreased 46.1% > Increased 10.1%

Companies identified the following improvement tasks to enhance labor market flexibility: ▲reforming fair wage systems (51.5%) ▲easing conditions for managerial layoffs (40.8%) ▲extending the usage period for fixed-term workers (25.4%) ▲expanding industries allowed for dispatch labor (22.3%) ▲formalizing wage peak systems due to retirement age extension (19.2%).

Since COVID-19, 68.5% of companies have implemented remote work, while 31.5% have not. However, when asked about work efficiency due to remote work, 46.1% responded that it 'decreased,' which is about 4.6 times higher than the 10.1% who said it 'increased,' showing a decline in work efficiency with remote work. The response that work efficiency was 'the same' was 43.8%.

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, said, "With unprecedented COVID-19 resurgence, semiconductor supply shortages, and increased economic uncertainty, along with amendments to the Labor Union Act, minimum wage increases, and enactment of the Serious Accidents Punishment Act, corporate burdens continue to grow. To overcome these crises and enhance companies' investment and employment capacity, it is a critical time to advance labor-management relations based on rational dialogue and compromise."

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