5TH EDITION
INTERNATIONAL
& COMPARATIVE
EMPLOYMENT RELATIONS
Globalisation and change
Edited by Greg J Bamber,
Russell D Lansbury and Nick Wailes
CHAPTER 11
Employment Relations in South Korea
Byoung-Hoon Lee
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Lecture outline
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Key themes
Context
Historical evolution of employment relations
Trade union developments
The ‘social dialogue’ model and the foreign exchange crisis
Labour unions
Employers and employer associations
Government
Collective bargaining and labour dispute resolution
Labour-Management Councils
Polarisation of labour markets
Transformation of the industrial relations system
Conclusions
Chapter 11:
2 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Key themes
• There have been dramatic transformations in Korean employment
relations over the last four decades.
• There was rapid economic expansion after the Korean War in the early
1950s.
• Progress towards democratisation was made after the end of
authoritarian rule in 1987.
• A fundamental shift towards a market-driven model of employment
relations following the 1997 economic crisis involved widespread
downsizing and the growth of non-standard labour and poor quality
jobs.
• There are serious concerns over the growing non-standard labour force,
as discrimination against these workers has become a major social
issue.
• Other major issues include increasing labour-management
confrontations and the contest over the structure of bargaining.
Chapter 11:
3 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
South Korean context
• Late but rapid industrialisation took place from the 1960s
onwards.
• ‘Compressed economic growth’ was led by the government
pursuing a policy of export-oriented industrialisation.
• Korea has experienced a turbulent process of democratisation
since the Korean War in the early 1950s: it was governed by
American military rule following WWII, then the first president
Syngman Rhee established the republic system, but was ousted in
1960. President Chung-hee Park took power through a military
coup in 1962, built an authoritarian regime and pursued largescale economic expansion during the 1960s and 70s. Another
military coup in 1980 put President Doo-hwan Chun in power.
• The military regime was replaced by a democratic political system
in 1987.
Chapter 11:
4 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Evolution of employment relations in Korea 1
• Up until the early 1960s, Korea was an agricultural economy
with 63% of the labour force employed in the primary sector.
• Transformation to export-oriented industrialisation over the
next three decades was led by the state.
• The ‘Korean model’ of government-led economic development
included the following:
– goals and policies for economic development were set by the
authoritarian government
– the government dominated the allocation of capital and industrial
technology
– the government assisted the growth of chaebols – business
conglomerates which are still dominant in Korea’s economic structure
today
Chapter 11:
5 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Evolution of employment relations in Korea 2
• From 1962-1987, employment relations were controlled
by government interventionist policy aimed at securing
cheap and strike-free labour.
• Collective action by employees to form labour unions
and strike was prohibited and employers unilaterally set
wages and conditions.
• Trade unions were weak, but membership steadily grew
in the 1960s and 70s.
• Until 1987, employment relations were dominated by
state authority and employers’ interests.
Chapter 11:
6 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Trade union developments from the 1980s
• The Great Labour Struggle in 1987 broke out following
democratisation. It saw the end of the state-controlled industrial
relations system, and the government officially recognised the
autonomy of unions and management in dealing with workplace
issues.
• The labour movement experienced enormous growth in the late 1980s
as a result: the number of trade unions tripled and membership and
density soared.
• Unions in many large firms took control of the shop floor and
management was forced to improve wages and working conditions
and establish corporate welfare programs.
• Union membership and density began dropping in early 1990s due to
the economic slump, government neo-interventionist labour policies,
better wages and working conditions, and declining public support for
militant unionism after the collapse of the communist bloc.
Chapter 11:
7 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
‘Social dialogue’ model and the foreign exchange crisis 1
• In the early 1990s, the government introduced a ‘social dialogue’
model based on tripartite consultation between the government,
employers and unions, in response to increasing globalisation
pressures.
• Nationwide agreements on wage increases and employment policy
were reached with the employers’ federation and union federation
in 1993 and 1994.
• The 1996 changes to labour laws emphasising labour-market
flexibility sparked nationwide strikes and anti-government protests
forcing the government to revise them in 1997.
• The foreign exchange crisis of 1997 caused huge changes in the ER
regime: there was extensive restructuring and downsizing by the
government, and businesses shifted the focus of ER from wages and
conditions towards issues surrounding jobs and employment. There
was also a sharp increase in industrial conflicts.
Chapter 11:
8 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
‘Social dialogue’ model and the foreign exchange crisis 2
• Confronted with recession, the Korean Government
resumed tripartite negotiations and a historic social pact
on range of labour issues concluded in 1998. This restored
some stability to the economy.
• Consultations stalled in 2000 due to hostility between the
Korean Confederation of Trade Unions (KCTU) and the
government, and have not resumed.
• The quality of working life has diminished since 1997 and
growing labour market polarisation is a key issue: nonstandard workers experience inferior wages, conditions and
union protection compared to regular employees in large
firms.
Chapter 11:
9 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Labour unions 1
• There was huge change and growth in the union movement in the
late 1980s.
• 62.9% of large firms with over 300 employees are unionised, even
though union density is very low at 10%.
• The most heavily unionised industrial sector was the textile sector.
This shifted to the metal and chemical industries as Korea’s
economic structure changed.
• Since 1987, male-dominated unions in heavy industries have led
the union movement.
• Membership in white-collar unions in the service industry has also
risen.
• In the 1980s, new unions espousing ‘democratic unionism’ formed
federations separate from the Federation of Korean Trade Unions
(FKTU), and were recognised as the KCTU in 1995.
Chapter 11:
10 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Labour unions 2
• Today the labour movement is divided between the FKTU and
KCTU; the KCTU pursues militant activism and the FKTU is
more conciliatory with the government and employers.
• The majority of unions are enterprise-based and bargain at
the firm level, but since the late 1990s unions have tried to
return their structure from enterprise to industrial unionism
in order to establish a centralised bargaining system and
strengthen their socio-political power.
• The Korea Health and Medical Workers Union, the Korea
Finance Industry Union, the Korea Metal Workers Union and
other unions transformed in this way from 1998 onwards.
• Recently, non-standard workers have attempted to organise
community-based general unions.
Chapter 11:
11 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Korean employers and employer associations 1
• Until 1987, employers imposed authoritarian supervision over
workers.
• After the expansion of labour power in 1987, management control
was eroded and shop-floor control was taken over by labour
unions in many firms.
• From the 1990s, employers began to take a hard-line stance and
launched ‘new management strategies’ (new personnel policies,
flexible working systems and union suppression strategies).
• With the 1997 economic crisis, many finance and public sector
organisations as well as large private firms undertook major
restructuring including downsizing, increased employment of nonstandard labour and outsourcing.
• This was a clear break from previous employment practices that
relied on internal labour markets (similar to the Japanese model).
Chapter 11:
12 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Korean employers and employer associations 2
• Using non-standard labour has become common.
• Nonetheless, there are wide variations among
chaebols.
• SMEs generally have poor employment practices.
• There are three important employer bodies:
1. the Korea Employers Federation (the official voice of
employers at the national level)
2. the Korean Chamber of Commerce and Industry
3. the Federation of Korean Industries
Chapter 11:
13 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Government 1
• The government is the biggest employer in Korea and exerts
influence over private sector employment relations through
the results of its own collective bargaining with unions in the
public sector.
• The government was an authoritarian regulator of
employment relations until 1987, suppressing collectivism and
stimulating economic activity and jobs.
• It adopted a social dialogue paradigm after 1987, hoping to
promote peaceful and cooperative relations between unions
and employers through the adoption of this tripartite model
involving various wage negotiations, policy consultations and
most recently an expansion of consultation agenda in 2007.
Chapter 11:
14 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Government 2
• But social dialogue has little legitimacy amongst unions who see it
as a continuation of government dominance and ineffectual in
solving labour market polarisation problems.
• The Ministry of Labour covers labour standards, IR, employment
insurance and equality, vocational training and occupational safety.
• Regional labour inspectors police and supervise working conditions
in accordance with the Labour Standards Act, and take action to
prevent and deal with labour disputes.
• The Labour Commission adjudicates unfair labour practices,
dismissal, discrimination and mediates labour disputes.
• The Minimum Wage Commission determines minimum wages
yearly.
• Unions are also critical of the Ministry of Labour for prioritising
economic growth over improving industrial relations.
Chapter 11:
15 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Collective bargaining and labour dispute resolution
• Collective bargaining is regulated by the Trade Union and Labour
Adjustment Act (the Act) and is conducted primarily at the enterprise
level.
• Collective bargaining for a wage contract is held every year in most
firms and every two years for working conditions.
• The FKTU and KCTU and the employer association have substantial
influence on enterprise-level bargaining.
• Industrial unions have demanded centralised bargaining and some
unions have made progress in contracting national agreements with
employer associations.
• The Act requires disputing parties to enter into mediation with the
Labour Commission and abolishes compulsory arbitration and strike
action.
• Previously, the government was able to arbitrate disputes involving
public firms providing essential services.
Chapter 11:
16 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Labour-management council
• The Labour-Management Council (LMC) is an institutionalised channel
for promoting communication and cooperation between employees and
management.
• The Labour-Management Council Act (1980) required all organisations
with 50+ workers to establish a council, but only a limited number of
firms established LMCs before 1987. After democratisation, the number
of LMCs grew.
• The Act Concerning the Promotion of Worker Participation and
Cooperation replaced the Labour-Management Council Act in 1997 and
the number of firms with an LMC grew dramatically.
• An LMC is composed of equal numbers of employee and management
representatives.
• Many unions use LMC meetings as an extension of their collective
bargaining while top management at many firms is indifferent to the
feasibility of cooperation and communication promoted by the LMC.
Chapter 11:
17 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Key issues: polarisation of labour markets 1
• During the economic crisis of 1997, most companies which
previously had ‘lifetime employment’ policies undertook
extensive restructuring of their businesses and employment
practices.
• Massive downsizing, spin-offs and outsourcing took place. This
amounted to a fundamental shift in Korean ER.
• Korea’s worsening employment structure derives from the
decline in the number of good jobs and increasing disparity
between good and bad quality jobs. The decline in manufacturing
jobs contributing to this.
• The share of non-standard employment has increased from
26.9% in 2001 to 36.7% in 2007.
• Discrimination against non-standard workers has become a major
issue in Korean society.
Chapter 11:
18 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Key issues: polarisation of labour markets 2
• There is a growing gap in overall employment conditions between
the primary sector for regular workers at large firms and secondary
sectors for workers in small firms and non-standard employees.
• Polarisation is also evident in workers’ fringe benefits and human
resources development, and the lack of job mobility between
primary and secondary sectors (workers get trapped in the
peripheral sector).
• Labour market polarisation is not just driven by external economic
factors but also by the strategic choices of industrial actors.
• Neoliberal economic reforms, the exploitative practices of large
firms and union policy focusing on the protection of existing
members rather than the representation of labour’s interests more
broadly have all contributed to these divisions.
Chapter 11:
19 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Key issues: transformation of IR system
• The number of labour disputes surged after 1997 and, although it has dropped
recently, IR is still unstable due to deep-seated mistrust amongst the parties.
This instability has constrained economic competitiveness.
• Disputes are related to restructuring, non-standard employment and industrial
bargaining.
• National labour centres have launched campaigns to organise non-standard
workers, and workers themselves have attempted to organise unions and take
collective action. This tends to be met with fierce resistance by employers.
• After laws to protect non-standard workers were introduced in 2006, many
firms replaced non-standard workers with subcontractors to avoid their legal
obligations.
• Industrial unionisation has been successful but these unions are confronted by
low organisational representation, limited resources, and opposition from
employers.
• Further challenges to unions are posed by legislation prohibiting wage
payments to union officials and permitting multiple unionisation at the
enterprise level.
Chapter 11:
20 South Korea
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Conclusions
• There have been significant changes in Korean employment
relations since the late 1980s.
• The period of post-democratisation witnessed the
institutionalisation of employment relations.
• The post-1997 economic crisis transformation has produced
serious problems, particularly the polarisation of the labour
market between regular employees and non-regular workers
who experience sub-standard wages, conditions and
employment opportunities.
• The impacts of the global economic crisis on employment
relations is unclear.
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.