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Corporate Unionism and Labor Market Flexibility in South Korea

Published online by Cambridge University Press:  24 March 2016

Abstract

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.

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Copyright © East Asia Institute 

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References

Notes

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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15. Superficially this seems like an echo of what Americas call “workfare.” But workfare in the United States implies that social benefits are conditional on accepting work, while Nordic productivism implies that the welfare state must guarantee that all people have the necessary resources and motivation to work.

16. EPL version 2 is calculated on the basis of weighted average of indicators for regular contracts, temporary contracts, and dismissals. For detailed information, see OECD, Employment Outlook: Employment Protection Regulation and Labour Market Performance (Paris: OECD, 2004), Annex 2.A1.

17. This study uses OECD labor market statistics-indicators (updated July 15, 2005, www.oecd.org). 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.

23. OECD, “Pushing Ahead with Reform in Korea: Labour Market and Social Safety-Net Policies” (Paris: OECD, 2000); Koo, Hagen, Korean Workers: The Culture and Politics of Class Formation (Ithaca: Cornell University Press, 2001); Yang, Jae-jin, “Corporate Unionism and Its Impact on the Korean Welfare State,” Korean Political Science Review 39, no. 3 (2005).

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27. OECD, “Pushing Ahead with Reform in Korea,” p. 53.

28. Ministry of Labor (Korea), “Analysis of the Economically Active Population in 2004.

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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31. OECD, “Pushing Ahead with Reform in Korea”; see also Table 1.

32. OECD, “Pushing Ahead with Reform in Korea,” pp. 6364.

33. Kim, Yu-Sun, Labor Flexibility and Nonstandard Workforce Increase (in Korean) (Seoul: Korea Labour and Society Institute, 2004), p. 17. Regular workers are defined as employees that work for more than one year and are paid “regular” wages, meaning that they are paid the standard wage plus overtime pay. Nonregular employment refers to temporary and daily work, plus atypical work such as part-time and on-call work. Temporary workers are employed for a determined length of time, usually longer than a month and shorter than a year. Daily workers are employed on a daily basis.

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34. Gazier, Bernard and Herrea, Remy, “Escaping from the Crisis and Activating Labor Market Policies in Asia: Some Lessons from European and French Experience with a Special Focus on South Korea,” paper presented at the international conference “Flexibility vs. Security? Social Policy and the Labor Market in Europe and East Asia,” Seoul, November 30–December 1, 2000, p. 344.

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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