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Corporate Unionism and Labor Market Flexibility in South Korea

Published online by Cambridge University Press:  24 March 2016


There is significant variance in the strategies of labor market flexibility under the same pressure of globalization. This article attempts to explain that variance by examining closely the Korean case, with particular attention to the response of labor, one of the most intractable actors in the reform process. After theorizing the nature of social welfare as a quasi-collective good and hypothesizing labor's responses based on Olson's theory of collective action, the study seeks to explain Korea's low commitment to flexicurity and the resultant dualism in the labor market. The core argument here is that the collective action problem among atomized corporate unions has led to high employment protection for regular workers in big business at the expense of marginal workers without appropriate social protection.

Copyright © East Asia Institute 

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This study was first presented at the workshop “Varieties of Capitalism in Asia” at Korea University in Seoul. I would like to thank Stephan Haggard, Byung-kook Kim, Moo-kwon Chung, and Joe Wong for their thoughtful comments and insights. I am especially grateful to the anonymous reviewers for their helpful comments and Heejung Chung and Yuiryoung Jung for their research assistance.

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17. This study uses OECD labor market statistics-indicators (updated July 15, 2005, Countries included in the analysis are the United States (USA), the United Kingdom (UK), Canada (CAN), New Zealand (NZL), Australia (AUS), Ireland (IRL), Switzerland (CHE), Sweden (SWE), Norway (NOR), Finland (FIN), Denmark (DEN), Germany (DEU), the Netherlands (NLD), Belgium (BEL), Austria (AUT), France (FRA), Spain (ESP), Portugal (PRT), Japan (JPN), and Korea (KOR).

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22. Korean labor was placed under the tight corporatist control of the authoritarian developmental state for economic and political reasons. First, the government's strategy for export-oriented industrialization was predicated on export price competitiveness in the world market. Thus, the economic imperatives were such that workers' collective action should be kept minimal and wages tightly controlled. Second, the security threat emanating from the Communist North led the South Korean government to be overly sensitive to union activities. For fear of the radicalization or “politicalization” of the labor movement, unions should be atomized and independent from outside “reddish” activists.

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29. It was the first general strike since the US military government outlawed the Korean Communist Party and leftist labor organizations in March 1947. The KCTU led the general strike, mobilizing 5 million workers for twenty-six days and costing a production loss of 3 trillion won—US$3 billion. See Yang, Jae-jin, “The 1999 Pension Reform and a New Social Contract in South Korea” (Ph.D. diss., Rutgers University, 2000), p. 129.

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35. The discrepancy is somewhat overblown, especially for health insurance, since means-tested health assistance is provided for low-income workers not covered by the health insurance program. Also, health insurance works on a household basis, whereby a considerable number of noncovered nonregular workers are protected through (male) breadwinners' health insurance.

36. As of 2000, only 10.8 percent of workers in workplaces with fewer than five employees are regular workers, while 89.2 percent are nonregular workers. By contrast, 86.4 percent of workers in firms with more than 300 employees are regular workers. See Choi, Kyungsoo, “A Study on the Definitions of Employment Status to Measure Employment Structure Changes and Their Status” (in Korean), Nodongkyungjenonjip 24, No. 2 2001).

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37. Korea's social insurance schemes are basically funded by payroll contributions split between the employer and the employee—in the case of company workers—and by individuals, in the case of the self-employed. Without a contribution history, no one can claim benefits.

38. The effectiveness of wage subsidy programs has often been disappointing in terms of bringing the unemployed back into unsubsidized work, because subsidized jobs are created that would have been created even without the subsidy, and workers who qualify for a subsidy simply replace others who do not. See Martin, J., “What Works Among Active Labour Market Policies: Evidence from OECD Countries' Experiences,” OECD Economic Studies, No. 30 (2000).

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39. Hankook Daily, March 29, 2004; Hankyureh, September 20, 2004; Hankookgyungje, July 21, 2005.

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