The labor reform issue is lying low in presidential campaigns.
Korea has been advised by the Organization for Economic Cooperation and the International Monetary Fund to reform its labor market. They blamed the duality in the Korean labor market, which divides regular and non-regular workers, as a major hurdle to growth.
Labor reform is a key issue, but it is also a difficult and politically burdensome problem involving conflicts of interest. And candidates avoid discussing labor reform as it may cost votes.
Moon Jae-in of the Democratic Party of Korea pledged job creation led by the government rather than through labor reform.
His policy to break the “labor aristocracy,” in which highly paid unionized regular workers go on strike for wage increases or more perks, was nowhere to be found.
Moon promised last month to abolish the merit-based pay system and performance evaluation for union members in the public sector if elected president.
A performance-based pay system is a measure against public servants’ widespread complacency stemming from unshakable job security. The system is expected to infuse competition and improve public service.
Ahn Cheol-soo of the People’s Party pledged to raise wages at smaller companies to 80 percent that of large companies with the injection of public funds. His pledge, which relies on tax revenues, is far from a wage increase through labor reform.
Germany reduced its unemployment rate from 11.3 percent in 2005 to 4.5 percent in 2015 largely through the so-called Hartz reform of the labor market.
In Korea, labor aristocrats strike almost each year, weighing on its economy. Last year, labor disputes at Hyundai Motor set back its output by about 140,000 vehicles.
Labor reform is an effort to change a labor market that is lopsided in favor of a few aristocratic unions.
It is unfair that regular workers in strongly unionized large industries are highly paid and take their jobs for granted, while non-regular workers are poorly paid for doing the same jobs and are given no chance to become regular staff.
If little is done to lessen the inequality, the income gap between non-regular and regular workers will get ever wider, causing conflicts. The difficult part of labor reform in Korea is the fight against the unchecked tyranny of unions.
Former President Park Geun-hye pushed for labor reform, but it went nowhere before she was impeached. And now, leading presidential candidates do not speak of labor reform at all.
Their promises of job creation might do them credit, and labor reform pledges might lead to confrontation with many workers. But it is a delusion to argue that the employment situation can improve without correcting the problems in the labor market. Job creation without labor reform is like a house of cards.
Moon’s campaign promise to create 810,000 jobs in the public sector can only be realized with taxpayers’ money. His pledge shifts the burden of increasing employment to the people.
Labor market problems appear to be off the list of evils he has vowed to eliminate. Moon is in a difficult position against trade unions, which joined candlelight protests to support the impeachment.
Meanwhile, Ahn emphasizes the role of private companies in creating jobs, but has not yet presented concrete plans.
Efforts for labor reform have gone back to square one. The National Assembly did not even discuss reform bills.
Labor reform is an important task the next government should tackle to overcome challenges such as continued low growth, an employment cliff and a low birth rate.
Labor flexibility, a performance-based pay system and shorter working hours are needed to create jobs. The bloated public sector should be downsized.
If just the principle of equal pay for equal work is well-observed, vulnerable groups in the labor market would feel less underprivileged and the occupational movement of workers would be faster.
For a solid growth of the nation, candidates should deal with the hard issue of labor reform as well as job creation.
