Labor Reform Set Sail... 52-Hour Workweek and Seniority Pay System Overhaul

Yoon: "If Labor System Doesn't Change, We Will Fall to Third or Second Rate in the International Market"

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] President Yoon Seok-yeol's strong determination to carry out the three major reforms in labor, education, and pensions stems from the judgment that these are urgent tasks that can no longer be postponed for the sake of the national economy and future generations. Although previous administrations have passed these issues on to the next government like a "hot potato," given that these are matters crucial to the nation's fate, the administration plans to devote full efforts to pushing forward the three major reforms during the second year in power, when momentum for national policy implementation is still alive before the general elections in the year after next.

On the 15th, at the first National Task Review Meeting held at the Blue House State Guest House, President Yoon stated, "Labor reform is aimed at continuously providing quality jobs where future generations can demonstrate their capabilities." He emphasized, "If labor issues become political disputes and political problems, both politics and the economy will fail," and added, "If the labor system does not change, we will inevitably fall to third- or fourth-rate status in the international market."

President Yoon and Minister of Employment Lee Jeong-sik presented four major directions for labor market restructuring: ▲flexibility according to labor demand ▲fairness in worker compensation systems ▲worker safety in the workplace ▲stability in labor-management relations. Specific measures mentioned included abolishing the dual labor market structure, establishing the rule of law for labor-management stability, flexibilization of the 52-hour workweek system, and expansion of the job-based wage system.

The labor reforms to be pursued by the government are expected to be based on the labor market reform recommendations announced on the 12th by the expert body, the Future Labor Market Research Committee. On the 16th, Minister Lee Jeong-sik held a breakfast meeting and discussion with professors from the Future Labor Market Research Committee, stating, "The government will respect the recommendations as much as possible and swiftly push forward labor market reforms," and added, "We will prepare legislative bills for wage and working hour reform tasks as soon as possible and aim to legislate them in the first half of next year. Additional reform tasks for improving the dual structure will also promptly begin social discussions."

According to the recommendations, the criteria for extended work under the 52-hour workweek system will be expanded to an annual basis, and the types and duration of worker dispatch will be increased. Proposals also included changing the minimum wage determination structure and abolishing the weekly holiday allowance. Recommendations were made to improve issues such as workplace occupation during union strikes and the prohibition of replacement labor. However, since most of these require legal amendments, significant difficulties are expected during future National Assembly discussions.

The government's indication of strong labor market reform is due to the fact that labor market laws and systems fail to reflect reality, and labor market competitiveness is rapidly declining due to imbalanced labor-management relations and a dual structure. In the 2022 International Institute for Management Development (IMD) national competitiveness labor market ranking, South Korea ranked 42nd out of 63 countries. While the unit labor cost increase rate, which indicates the speed of labor cost growth, rose 12 ranks from 2019 to 2021, labor productivity fell one rank during the same period, dropping out of the top 30. Particularly, recent unbalanced labor-management relations, such as the Cargo Solidarity general strike, have been cited as factors lowering national competitiveness.

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