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(News Focus) Gov't, ruling party's top priority of reforming labor market

All Headlines 18:18 July 20, 2015

SEOUL, July 20 (Yonhap) -- Reforming the rigid labor market has been made the top priority by the government and the ruling party, a move expected to fuel more conflicts between labor, management and the government.

On Monday, the leader of the ruling Saenuri Party vowed to press ahead with efforts to overhaul labor issues regarding market duality -- the difference in pay and job security between regular and non-regular workers.

"The party will make all-out efforts in pushing ahead with reforming the labor market in the second half of this year for the sake of our country's future," Kim Moo-sung said in a meeting with senior party members.

The remarks are in line with President Park Geun-hye's repeated calls to decrease the overall number of temporary workers who tend to feel less secure about their jobs than regular employees.

Government data showed that the number of non-regular workers hit 6 million in March, or 32 percent of the country's entire workforce.

The temps usually have lower salaries and fewer workplace benefits, such as the "four major insurances" -- health insurance, occupational hazard insurance, unemployment insurance and the national pension.

Park has also promised to revise regulations aimed at encouraging the public sector to hire more workers on a permanent basis and at narrowing the gap in benefits, an effort to prod the private sector to follow suit in decreasing the number of non-regular workforce.

Both Park and the ruling-party mutually agreed that solving the problem could help put the country's sluggish economy back on track and create more jobs eventually.

Job creation in South Korea hit a 12-year high last year, with more than 500,000 workers being newly employed.

The increase, however, was mostly driven by non-regular employees, whose contracts typically last up to two years, and the self-employed.

Official data showed that more workers aged 15-29 were signing up for these non-regular jobs, and those in their 60s and older were opening their own businesses.

"The problem of polarization in the labor market is the inflexibility of regular positions that leads to an increase in non-regular workers," said Lee Hyung-joon of the Korea Employers Federation.

"If the companies kept up the work force flexibly in accordance with the market situation, they would be able to keep the original workforce and hire more workers," Lee added.

Park's drive, however, has been resisted by unionized workers, with hundreds of thousands of unionized workers voting to go on a strike against the government's efforts to restructure the labor market.

The Korean Federation of Trade Unions, an umbrella union, threatened to stage a general strike, the first time since 1997. The Federation of Korean Trade Unions, another umbrella union, also held a strike last week, the second of its kind this year following the one in April.

The unions strongly oppose the government's move to push state-controlled corporations to hire more employees by encouraging them to adopt a wage peak system.

The system calls for giving less work and lower wages to people facing retirement, with the money saved being used to hire more workers.

The government has also recently announced a plan to ease inflexibility of the labor market by narrowing the gap between non-regular and regular positions.

The government claims that it is inevitable to decrease the benefits of regular positions in order to provide more benefits for the non-regular workers, a move seen by the labor circle as "management friendly."

"Solving the polarization of the labor market needs enough conversation between labor, management and the government," said Kwon Soon-won, an economics professor at Sookmyung Women's University. "The parties need to think about what they can earn from yielding, instead of pursuing their own interests."


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