Employment Structure and Collective Bargaining Under the IMF-managed Econimic System

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Korean society has been whirled into crisis situation since the end of last year. Big changes took place in economy, politics and society of Korea, and have affected all aspects of people's life. The life of working class is getting worse. Mass unemployment, insecure job, cuts in wages, deteriorating working conditions, deepening of poverty and inequality have been imposed on Korean workers, causing serious conflicts and more labor disputes. Korean labor movement is now facing new challenges that it has never experienced before. These challenges come from globalization of capital, offensive of the neo-liberalism, and management rationalization. Korean labor movement has been conducting fierce fighting, sometimes calling for general strike. Labor movement will continue to fight to resolve the problems facing the Korean workers.

1) Economic Recession and Change in the Labor Market Structure

Mass Unemployment

Unemployment rate, which has shown sharp rise since the currency crisis, has continued to rise, recording 7.6% last July. Unemployed people number 1.651 million. These figures represent a triple increase of last year's 2.6% of unemployment rate and 556 thousand unemployed people. Among the unemployed, 1.25 million were recent job losers. The proportion of head of the household among the unemployed is 46.7%, which was 35.7% a year ago. These figures are based on ILO survey method. Real number of the unemployed is considered to be much more than formal statistics suggest. According to KCTU, if unpaid family employees, daily workers of the construction industry, and discouraged workers who gave up searching for a job is included, the real number of the unemployed would reach 3.65 million, making unemployment rate 16%. If those who work less than 17 hours per week are counted, the number will increase to about 5 million. Mass unemployment like this is caused by severe economic retrenchment, flexibilization of labor market, and mass lay-off resulting from industrial and corporate restructuring.

Dwindling Employment

Employment has been shrinking since early this year and is getting worse. In terms of labor supply, economically active population has decreased 0.9% during second quarter compared to the same period last year. Activity rate has also dropped 1.5% point from 63.1% to 61.6% during the same period. In terms of labor demand, number of the employed has decreased 5.4% compared to a year ago, and is expected to go down further. Drop in the labor supply is mostly due to the fact that female workforce is leaving the labor market due to the increasing difficulty finding a job admist a severe economic downturn. This means that number of disappointed unemployed has increased.

Job security is also becoming worse. Number of daily workers and temporary workers, that was 46.1% of the whole workforce, is also rising. The portion of regular workers is getting smaller, while that of irregular workers bigger. In addition, youth also finds the job market for the new entrants is contracting. The number of youth who found their job this year has decreased 13.8% compared to a year ago, making youth most vulnerable age group to the economic retrenchment. Unemployment rate of youth aging from 15 to 24 during first quarter of this year, was 14.8%, making it double the number of last year's 7.2%.

[Table2] Recent Employment Indicators

(Unit: thousand people, %)

Many unions had to make concessions in return for guarantee of job security or minimal lay-off. As a result, wages were cut down and working conditions have deteriorated. There are some cases in which unions secured "Agreement on Job Security" or strengthened clauses on job security in the collective agreement, but these moves did not spread widely. Trade unions have demanded to raise the level of bargaining to the sectoral or industrial level. But this demand was rejected from the employers. Only several federations were able to proceed to engage in cross bargaining in which workers' federation bargains with individual employer.

As of end of August in which 67.8% of the bargaining was completed, total wage increase rate recorded -2.4%. In many enterprises, wages were frozen or cut down due to the economic retrenchment and job instability. Overall wage level has also recorded downturn trend. Average nominal wage for the workplace hiring 10 and more workers during the second quarter of this year was 1.385 million won, which is a decrease of 1.2% compared to the same period last year. This means that real wage has decreased 8.6%.

Fringe benefits and company-provided welfare have also been reduced in the collective agreement. Trade union activities were also treated adversely in the agreement. More employers have violated collective agreements and conducted unfair labor practices to control trade union. The labor disputes have increased a little bit, recording 73 disputes as of August 22 this year from 62 a year ago. The number of application for mediation procedure recorded 558, making an increase of 130 from 428 of last year. Major causes of labor disputes include conflicts in collective bargaining (34 cases), wage arrears (17 cases), and wage increase (10 cases).

3) Responses and Strategies of Trade Union

Korean labor movement is struggling to promote the internal reform of the union movement and to formulate the strategy to cope with the changes in economic environment and to meet the new challenges. Union movement is also painfully facing crisis of its own. It is imperative for the Korean labor movement to seize an opportunity for further development even under this adverse situation.

While aiming for the total reshaping of the Korean capitalist system, KCTU set its short term objectives as follows : dissolution of Chaebol system, political reform, dissipation of collusion of political and economic power, elimination of corruption, job security through the reduction in working hours, reform of social welfare system, guarantee of democratic labor relations and basic labor right, re-negotiation with IMF to stop the unjustifiable intervention of IMF. To ensure job stability and to fight against the unemployment, KCTU demands job security and creation of extra job through the reduction of working hours, expansion of unemployment insurance and introduction of unemployment assistance, strengthened effort to avoid dismissal such as revocation of lay-off system, and expansion of public works and unemployment fund.

In an effort to achieve above-mentioned objectives, KCTU has promoted general strikes of last May and July, signing campaign for the reform of politics and Chaebol, demonstrations and rallies to demand job security, anti-unemployment drive, and petition campaign for reform of law. KCTU is going to have its members vote on the resolution of all-out struggle in November, and launch a large-scale national rally of the workers (November 8), campaign for reform of law, and mass strike.

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