Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Korea urged to fix labor law to attract foreign investment
President Moon Jae-in speaks to foreign business leaders at a meeting at Cheong Wa Dae, Thursday. It was the first such meeting since Moon assumed presidency in May 2017. / Yonhap
By Kim Bo-eun
By Kim Bo-eun
A noted international lawyer has called for President Moon Jae-in and his administration to overhaul labor rules to attract more foreign investment and foster job creation.
He stressed that Moon's most urgent task is to revise labor regulations so that foreign companies can hire and lay off employees in a more flexible manner.
"In Korea, the law prohibits laying off employees without justifiable cause and it is extremely difficult to make a case for this," Jeffrey Jones, chairman of the board of governors of the American Chamber of Commerce (AMCHAM) in Korea, said in an interview.
"The modification of the labor standard act is necessary."
The remarks come following the AMCHAM board chairman moderating President Moon's town hall meeting with executives of foreign invested companies at Cheong Wa Dae, Thursday.
Sixty-five foreign business leaders, including chief executives of BNP Paribas, Heineken, City Bank Korea, Pfeizer Korea, United Air and IKEA Korea, attended the meeting, the first of its kind since Moon took office in May 2017.
Cheong Wa Dae arranged the get-together to hear about difficulties foreign companies face in doing business here. These businesses have a weighty presence in Korea, contributing to 19 percent of exports and 7 percent of employment.
Jeffrey Jones, chairman of the board of governors of the American Chamber of Commerce (AMCHAM) in Korea / Korea Times file
Increasing flexibility for layoffs is one of the demands foreign businesses here have been making.
"This would have a huge impact on the job market," said the veteran lawyer at Kim & Chang,.
He cited Singapore and the U.S. as good examples of having flexibility for dismissals, and thus successfully attracting foreign companies.
The government has stated it wants foreign businesses to create jobs, but it has been criticized for introducing policies that have made the labor market more rigid.
In a survey conducted by the Korea Economic Research Institute on 120 foreign-invested firms in May last year, 65 percent responded local labor policies posed a burden to their businesses.
But Jones said that it was also important to establish a safety net for the unemployed at the same time.
Since the process involves revisions to regulations, Jones said the government needs "a strategy to engage with the National Assembly and the public."
Other challenges foreign business have cited are the minimum wage hike, the limit placed on hiring non-regular workers, and a quota for hiring young people.
Foreign investment reached a record $27 billion ($2.37 million) last year, growing 17.2 percent, due partly, according to some observers, to the easing of tension between South and North Korea. However, barriers have yet to be removed for further growth.
“To facilitate more investment, the government needs to free up the regulatory environment,” Jones said.
“Korea is competing with countries around the world for investment. Improving how foreign businesspeople feel about their businesses here will make them the best ambassadors for Korea.”
Jones, who has lived in Korea for more than 40 years, said Korean businesses, particularly chaebol, also have a role to play in creating a more innovative business environment.
In Jones' view, the government imposes regulations because it does not trust the companies to protect consumer interests.
"The mistrust creates a vicious cycle in which regulations are placed and business' performance and innovation are stifled."
"Korean Air is a good example which shows the corporate mistrust of the consuming public," he said.
Last week, shareholders of Korean Air voted against the reappointment of the airline's chief Cho Yang-ho as a board director.
This was the first time shareholders voted to remove the head of a company from his post as representative director.
Jones has a broad understanding of the business environment in Korea. Under the Roh Moo-hyun administration, he served as a member of the Regulatory Reform Commission, becoming the first foreigner to serve in a government position in Korea.