Insoo Jeong Vice President Korea Labor Institute

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1 This paper is part of the lecture prepared for the 8 th ASEAN Government Officials HRD Program organized by the Central Officials Training Institute(COTI) on August 26, 2003, in Kwacheon, Korea. Insoo Jeong Vice President Korea Labor Institute isjeong@kli.re.kr 1. Vision for a Labor Society Korea s GDP has remained in the $10,000 range since What is needed in advancing into a $20,000-GDP economy is a set of well-coordinated industrial, labor, and welfare policies in addition to a shift to a new economic paradigm designed for an advanced economy. Korea s mission for a $20,000-GDP economy is to create a society where an opportunity for self-development and employment is offered to all those who desire it, and thus all members could enjoy a good quality of life. - Build a foundation for renewed growth by providing businesses with greater opportunity to do business and by attracting foreign capital - Build a cornerstone for growth in the aged society by nurturing quality human resources and expanding job opportunities Transform labor-management relations from one of social cost to one of economic and social asset by re-instilling fairness and faith through labor standards that meet international criteria - Enhance independent problem-solving capabilities of labor and management by building a system of sharing responsibility and authority between them 2. Labor Policies for a $20,000-GDP Economy 1) Labor Market

2 A. Active Implementation of Labor Market Policies Increase growth potential by efficiently developing and tapping potential labor and actively managing demand for manpower - Actively encourage youths, women, and the (semi) elderly to participate in economic activity in order to maintain long-term economic growth potential in a society characterized by low birth rates and a growing elderly population - Support development of human resources and creation of knowledge-based jobs to meet the demands of the information age in the global arena The government to directly involve itself in creating jobs by fostering the job market in the social sector - Develop policy implementation systems and social services in welfare, environment, culture, and national infrastructure sectors to create new jobs in these areas, and identify demand for public administrative services Implement aggressive labor market policies to alleviate the widening mismatch between supply of and demand for labor (skill, job, and information mismatch) of the market due to its rapid structural changes. Training programs and economic/industrial policies need to be coordinated Secure efficiency in the labor market and economy in general by alleviating imbalances and inefficiency generated in the process of making the labor market more flexible - Develop policies to enhance functional flexibility of the labor market at large businesses with a rigid labor structure B. Skills-development System for New Growth and Social Integration Enhance diversity and sophistication in skills-development programs to meet the challenges of technological advances and intensifying global competition - Diversify skills sets for development to incorporate more knowledge-based industries moving beyond the manufacturing sector, with the view to building a

3 long-lasting foundation for job creation, both in traditional industries with enhanced value-added and in knowledge-based sectors - Need to establish privately-led skills development program characterized by expanded range of choices by end-users and a system of competition and evaluation in order to alleviate the problem of skills mismatch Promote flexicurity (flexibility + security) by means of opportunities for lifetime skills development - Innovate current career skills development programs to promote corporate learning organizations - Encourage large corporations and government-invested corporations with independent training infrastructures to establish effective systems for human resource development while financially support SME s training and emphasize their training environments improvement - Revise professional qualification systems to emphasize field skills and empower students, job seekers, and currently employed people to pursue life-long career skills development Assist youths to smoothly join the labor market by coordinating school education with career training programs - Coordinate with schools to offer career counseling, extend opportunities to explore different job areas, and encourage job experience programs (training programs) on a short-term and frequent basis to help youths accumulate career experience - Expand commissioned job training programs and build joint field training areas for youths not in school and those attending liberal arts high schools and vocational high schools Promote regionally balanced development by means of decentralized programs for human resource development - Form a regional human resource development committee consisting of the regional government officials, labor and management, and experts to work on developing public training institutes to serve as continuous education and training centers - Improve the governance of public training institutes to

4 bring about innovation C. Labor Welfare System based on Social Integration and Work Provide and foster employment and welfare services for the disadvantaged to integrate them into the labor market - Promote welfare by offering satisfying jobs to the disadvantaged such as the working poor, irregular workers, and able-to-work but unemployed job seekers to ensure adequate and stable income - Actively intervene to create stable jobs, assist the less privileged to develop job skills, establish and extend social services - Labor market integration policy linking employment and welfare services accommodating individual needs and characteristics Concentrate on reintegrating the labor market by enhancing chances of employment for the population able to work but with poor job skills, through training programs Provide child and health care services and other accommodations to facilitate access to workplaces for the able-to-work population with difficulty in finding and keeping jobs Encourage the population with low probabilities for employment to start independent businesses or join companies working for social causes Strengthen incentives to work by introducing Earning Income Tax Credits (EITC) for those with jobs that earn a certain amount of income Foster a non-discriminatory, rewarding and safe work environment to realize labor welfare and motherhood protection - Further advance protection for working mothers and establish a system of social cost-sharing Costs involved in protecting motherhood to be shared by the general account of the government, employment insurance, and health insurance Encourage women to work by offering child care support for low income earners, and coordinate and reinforce child care policies across government agencies Expand the eligibility range for Employment Insurance and establish rational policies to encourage job seeking

5 - Continue to expand the Employment Insurance to cover employees working for small businesses, people paid on daily basis, and short-time workers - Generate plans to persistently expand coverage of social insurances, such as introducing the honorary social insurance supervisory system supported by Employment Insurance - Utilize tax policies such as income tax exemption policies to motivate the socially insured (such as Employment Insurance) to work. In particular, increase the range of income tax exemption for those irregular workers with frequent job transfers - Provide subsidies to the non-profit organizations in the private sector to create jobs that generate social capital D. Expansion of Labor Market Infrastructure Maximize job security by effectively implementing preventive measures and labor policies aimed at enhancing labor market efficiency - Reduce unemployment and labor shortage problems by strengthening job security functions and expanding organizations working to protect job security - Revamp and restructure the public agencies on job security so that their job stabilization function is emphasized among others Build employment information system for collecting and analyzing labor-related data on a long-term basis to boost efficiency in the labor market - An open system offered by means of a simple certification procedure to any end-user of labor (businesses, corporations), supplier of labor (job-seeker, employed worker), or policy personnel (policy makers, researchers) Build an effective and efficient national statistics & information system in order to secure validity and efficiency in labor policies aiming to achieve labor transfers without going through jobless periods - Urgent need to expand manpower and budget for statistical research functions of the Ministry of Labor and/or Korea

6 National Statistical Office to obtain accurate insight into the demand and supply situations in the labor market that are broken down into regions, industries, and occupations - National information infrastructure on human resources to be built taking into account connectivity and integration among various government ministries that generate data on employment and human resources (Korea National Statistical Office, Ministry of Education, etc.). Integrate Work-Net and HRD-Net systems of the Ministry of Labor with Career-Net of the Ministry of Education (among others) to improve on contents of an integrated human resource information system and to avoid duplicate investments Formulate plans to integrate national administrative databases (DB) such as the nation s four insurance DBs including the employment Insurance and national pension, and those of National Tax Service and civil servants - Review on a long-term basis the establishment of a labor statistics office that would oversee the national human resources information system Alleviate the labor mismatch problem on a long-term basis by reinforcing connectivity between workplace and school and between workplace and industry by means of thorough research on jobs E. An Evaluation System for Labor Market Policies Establish a neutral and objective policy evaluation system to enhance transparency and fairness in labor administration and to elevate efficiency and effectiveness in labor policies - The five principles of Good Governance' are openness, participation, accountability, effectiveness, and coherence Conduct preliminary evaluations and implement a real-name system for policy-makers to allow heightened transparency and accountability in the labor policy-making processes - The policy-maker is to create a policy document after preliminary assessment from a neutral and specialized research agency in the process of formulating project-based labor polices

7 - The policy document should accompany the preliminary policy evaluation report and contain the following information: policy objective (assessment of the current situation and need for new policy), philosophy on governance and its relation to long-term policy platforms, population targeted, expected benefits and negative side effects, effective implementation channels, mid-term and post-evaluation indices, and means to manage evaluation materials. 2) Labor-Management Relations A. Labor-Management System in line with Global Standards Creation of labor unions and expansion of membership - The tight eligibility requirements for membership into labor unions exclude the jobless and contingent workers, and have heated debates on the right of association of these groups - Limiting labor union membership only to employees (or the employed) on the ground that the labor unions at the enterprise level are prevalent in the nation runs against the right of freedom to establish labor unions stipulated in the current labor union laws (Article 5), or the freedom of association described by ILO, as well as the spirit of legislative cases of other countries Need to further clarify subjects and procedures of collective negotiations - The vagueness in the description on the subjects, timing, and procedures of collective negotiations leads to confrontation between the labor and management each time negotiations and strikes are attempted, and calls for clear legal stipulation to alleviate tension arising from such reasons Form a single channel of negotiations to accommodate the needs of foreseen multiple labor unions - A unified negotiations channel is needed to minimize costs both to the labor and management, maintain balance in negotiating power, and instill order and stability in practice of negotiations Probability of multiple labor unions being created

8 within a company increasing as labor union activity becomes more industrial level Need to prevent disputes on negotiation methods and procedures among the industrial labor unions and multiple employers Need to readjust definition and range of essential public service industries. - The definition of Korea s essential public service industries is broader than that internationally recognized. At the same time, some industries are acknowledged as such by international provisions while excluded by Korean law. These lead to the need to reidentify the concept of essential public service industries and make adjustments to the types of industries that fall under this category. Need to enhance equitability in the definition of unfair labor acts and illegal union strikes, and to enforce laws in a fair manner - Limit criminal penalties for illegal union strikes to clear acts of violence and instead impose civil liabilities under a system of fair standards Penalty for obstruction of normal business is currently applied to illegal union strikes and leading to frequent criminal arrests. This not only causes tension between labor and management and between labor and government, but also draws criticism from the international labor community. B. Korea Tripartite Commission and Improving Dialogue and Cooperation Channels Improve efficiency and readdress procedural issues for discussions on agenda items - Diversify discussion procedures of the KTC into agreement, consultation or consolidating differences, depending on the nature of the agenda. Allow for flexible and efficient operations of the Commission and establish binding provisions for agreements - Preset deadlines for each agenda item to encourage expeditious opinion gathering for important issues - To address issues of conflicting interests, establish a

9 Public Interest Committee that would create its own draft plan, to avoid any unnecessary delays in decision-making. If no agreement is forthcoming after a set period of time, the Public Interest Committee s plan should be submitted to the government. Form partnerships among the labor, management, and government at the industry and regional levels. - The industry consultative group shall consist of representatives from the Ministry of Labor, labor and management from the industries, representatives of public interests, and central government agencies related to commerce and industry (Ministry of Commerce, Industry and Energy, Ministry of Construction and Transportation, Ministry of Planning and Budget). These members shall share information on industry trends, labor-management relations, and government s industrial policy directions with the view to carrying out consultations and advisory for policy revisions to be submitted to the government for review. - Regional partnerships among the labor, management, and government shall be forged through the Regional Tripartite Commission which shall deliberate on ways to strengthen its functions, regional labor market policies, labor welfare policies, plans to attract foreign investment, efforts to promote labor-management cooperation, and regional issues pertinent to labor and management. C. Expansion of Infrastructure for Labor-Management Relations Strengthen Labor Committee s role in preventing disputes - Confer supervisory and inspection authority on Labor Committee to monitor situations at business locations with a history of frequent disputes and to double efforts to improve fragile labor-management relations at necessary sites - Establish a Special Arbitration Committee for the public sector to prevent and arbitrate disputes between labor and management in the public sector Create and operate a graduate school concentrating on labor to produce experts in the field of labor - The graduate school on labor should offer degree programs

10 and non-degree courses for leaders of labor unions, chief executive officers of companies, personnel involved in human resource management, arbitrators and judges within the Labor Committee, employees of the Employment Insurance System and Industrial Accident Compensation Insurance, and civil officials from the Ministry of Labor. - The above graduate school should also offer programs for representatives (labor, management, and government) from China, Vietnam, and other Asian states with a high interest in Korea s labor policies, to grow into a Northeast Asian hub for labor research and education. Strengthen efforts to prevent disputes by regularly monitoring labor-management relations - Promote regular monitoring of labor-management relations in the public sector to instill stability amidst tension recently rising Hold Tripartite briefings in a form of Task Force at the regional and industry levels whenever the need arises to coordinate opinions on major issues and eliminate controversies Neutral research teams from national institutes such as the Korea Labor Institute should conduct regular monitoring and consulting on government-invested corporations in order to improve labor-management relations in the public sector D. Strengthened System of Participation in Management and Introduction of Labor-Management Partnership Program Labor-Management Consultative Committee to play central role in regularly releasing information on management and operation status to employees to encourage labor unions to participate in business management Flexibility in wage structures and personnel management systems by means of the annual compensation system has been realized to some extent but substantial changes are yet to come. Qualitative flexibility should be enhanced to boost efficiency in production, value-added productivity, and stability in labor-management relations. Offer effective outplacement services in conjunction with labor unions. Also, the labor and management should jointly develop long-term technical training programs for current employees as well as the newly recruited.

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