Ruling party prioritizes labor reform

By Do Je-hae

The ruling Saenuri Party has launched a special committee led by Rep. Rhee In-je, a former labor minister under the Kim Young-sam administration, to support President Park Geun-hye’s vision for labor reform.

During the committee’s first meeting at the National Assembly Tuesday, Rhee emphasized the urgent need to transform Korea’s rigid labor market in order to overcome protracted low growth and job shortages for young people.

He underlined the necessity of adopting a peak wage system aimed at cutting wages for older workers ahead of retirement to facilitate hiring in the corporate sector. However, the plan has triggered an intense backlash from labor activists and the opposition bloc.

“We will do our utmost to reach an agreement on the peak wage system through negotiations through the trilateral meetings of labor, management and government representatives,” Rhee told reporters.

Rhee said that the peak wage system is instrumental for resolving problems owing to Korea's rigid labor market.

“The wage peak system will bring a new culture of the labor market,” Rhee said. “If the labor market becomes more flexible, there will be more jobs and this will revitalize the corporate sector. It will be beneficial for all laborers.”

Rhee emphasized the timeliness of labor reform, since starting next year companies will implement the extension of retirement age to 60. “We must proceed with labor reform during regular Assembly sessions this year.”

He called for a swift scheduling of the tripartite talks. “For the labor reform to take off, the trilateral meetings must resume at soon as possible,” Rhee said, calling on the Federation of Korean Trade Unions (FKTU) to resume working with them.

The FKTU has said that the government's reform plan does not properly reflect the status of the Korean labor market, where only 10 percent of Korean workers reach retirement age. Korean workers’ average length of service is 5.1 years, compared to 10 years among OECD countries employees.

Prime Minister Hwang Kyo-ahn addressed the youth unemployment crisis during a Cabinet meeting Tuesday.

“To tackle this issue, the peak wage system should be adopted first in the public sector,” Hwang said. “The labor reform is crucial for creating more jobs for youngsters and revitalizing the economy. The entire Cabinet should be devoted to carrying out the reforms.”

President Park has underlined the wage peak system as a key tool for resolving the unemployment crisis among young people. Youth employment recorded its highest level in 16 years last month, when the jobless rate among people between the ages of 15 and 29 reached 10.2 percent.