[Freedom Forum] Labor Freedom Bound by Militant Unions and Regulation

Our labor freedom is tied up. In the labor market category of the “2023 Index of Economic Freedom” published by The Heritage Foundation, South Korea received a rating of “repressed.” Korea scored 56.2, far below major countries such as the United States (76.2), Italy (70.6), and Japan (66.8). The Heritage Foundation cited “rigid regulations” and “militant union activity” as the reasons why Korea’s labor sector effectively received a failing grade.

In Korea, labor unions have become so distorted in meaning that terms like “aristocratic unions” and even “construction thugs” are now used. Rather than protecting workers’ basic rights, they are making excessive demands such as preferential hiring for the children of long-tenured employees. When these militant unions do not get what they want, they disrupt production through illegal strikes and create major obstacles to attracting corporate investment.

Hyundai Motor is preparing for changes in the future mobility industry, but resolving its conflict with unions worried about job cuts from automation has not been easy. The union even announced a partial strike while demanding that the retirement age be raised to 64. This is a selfish claim that places immediate job security above the company’s future.

Such actions by labor unions infringe on corporate freedom and further rigidify the labor market. They claim to be acting for “rights,” but in reality they are developing into a form of collective selfishness that pursues only the group’s own “interests.”

Labor-related regulations in Korea include the Serious Accidents Punishment Act, working-hour regulations, and the three laws on non-regular workers. Among them, the “52-hour workweek” sparked considerable controversy from the very beginning of its introduction. The problem was that, in some industries, working-hour restrictions did not fit the nature of the business. Moreover, as research findings emerged showing that working-hour regulations reduce firms’ return on assets and increase costs, calls for regulatory reform gradually began to grow louder.

However, reality has unfolded differently from expectations. Early in the Yoon Suk Yeol administration, working-hour reform ran into difficulty as it came to be labeled the so-called “69-hour workweek.” Unlike the reform’s intended goal of “securing flexibility” in labor, it became perceived by younger generations as a forced extension of working hours. As public backlash grew over whether this reform ran counter to a social atmosphere that prioritizes work-life balance, the government has found itself unable to move forward or backward.

In conclusion, regulations and militant unions are firmly holding back labor freedom. Working-hour regulations are increasing costs, while increasingly powerful unions are at times negatively affecting corporate stock prices. Yet reform efforts remain slow, and instead, the current reality of Korea’s labor market is one in which new regulations are created that place even more shackles on it.

We must look at the global market. While other countries are easing regulations to promote the development of their domestic industries, Korea is creating regulations on its own and cutting off the very sprouts of growth. Unlike in the past, companies no longer compete only within Korea. We cannot simply stand by and watch rigid regulations and militant unions erode the competitiveness of our businesses. Now is the time for real change, not reform in name only.

Subin Oh, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [자유발언대]강성노조와 규제에 묶인 노동 자유

Author: Su-bin Oh

Date: 2023-12-29

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=26319