Ahn Cheol-soo: "We Must Increase Labor Market Flexibility and Strengthen the Social Safety Net"

by Lim Chunhan

Published 26 Aug.2020 10:45(KST)

"Germany's Hartz Reform Really Suggests a Lot to Us"

[Image source=Yonhap News]

[Asia Economy Reporter Lim Chun-han] Ahn Cheol-soo, leader of the People’s Party, stated on the 26th, “According to the 2018 National Assembly Budget Office, only four countries, including South Korea, have both labor market flexibility and stability below the OECD average,” adding, “Whenever I have the opportunity, I have emphasized reform toward a flexible security model that increases labor market flexibility while strengthening social safety nets.”

At the policy seminar “On(on) Gukmin Study Room” held at the People’s Party headquarters that day, Ahn said, “In the 2019 World Economic Forum’s national competitiveness evaluation, the main factors holding back South Korea are the product market ranked 59th and the labor market ranked 51st,” and “Among the 141 countries evaluated, attention must be paid to key indicators highlighting the need for labor reform, such as labor-management cooperation ranked 130th, severance pay costs ranked 116th, and employment and dismissal practices ranked 102nd.”

Ahn pointed out, “The dual structure and disparity in the labor market between large corporations and small and medium enterprises (SMEs), as well as between regular and non-regular workers, are also serious issues,” adding, “According to a 2019 report by the Small and Medium Business Institute, the wage gap between large corporations and SMEs has widened over the past five years, and the smaller the company, the greater the wage gap with large corporations. To make matters worse, due to COVID-19, SME workers, non-regular workers, and daily workers are facing even more severe marginal situations.”

Ahn said, “You are probably familiar with Germany’s Hartz reforms. They offer us many lessons,” and “Until the early 2000s, Germany was called the ‘sick man’ due to economic recession. However, Chancellor Schr?der formed the Hartz Labor Reform Committee and promoted labor reforms that created economic benefits while establishing social safety nets, laying the foundation for Germany’s prosperity.”