Just over a month ago, Samsung Electronics faced the threat of a full-scale strike in its semiconductor division. Labor and management had circled without finding common ground over performance-based bonuses. The government stepped in to prepare a mediation proposal, and the major crisis was narrowly avoided. While Samsung Electronics' strike threat has passed, concerns over the labor sector's "summer struggle" have grown greater than ever, as Hyundai Motor, GM Korea and others fail to find common ground in wage and collective bargaining negotiations. This contrasts with Taiwan's TSMC and Japan's Toyota, which have maintained cooperative labor-management relations without strikes. Observers say a structural solution is needed for labor-management relations at domestic companies.
In a recent interview with Seoul Economic Daily, Lee Jung-sik, former Minister of Employment and Labor, said, "Korean society has conflicts so deep that there is even the expression '3C conflict' — compound, complex and compressed — and labor-management relations are no exception." He pointed out, "Because of such factors, companies are afraid to invest in people." Lee is one of Korea's top labor policy experts, having served as a research fellow at the policy office of the Federation of Korean Trade Unions (FKTU) in 1986, FKTU secretary-general in 2014, secretary-general of the Labor Welfare Foundation in 2017, and Minister of Employment and Labor in 2022.
Lee pointed to the accumulation of conflicts that were not properly resolved during the process of high-speed economic growth as the cause of the deep distrust between labor and management in Korean society. "Distrust has built up through the long experience of conflict," he said. "It is not the responsibility of either companies or unions alone." He diagnosed that such distrust in labor-management relations has led to companies' passive attitude toward workforce investment. He added, "Workforce investment is ultimately necessary for companies' own survival," explaining, "As ESG (environmental, social and governance) management spreads worldwide, the argument that companies should play socially necessary roles such as workforce investment, instead of the existing profit maximization, is gaining strength."
Lee emphasized the need for dialogue and cooperation to build trust between labor and management. "In labor-management relations, trust, cooperation and dialogue are interlocked," he said. "The government must design laws and systems that can support the balance of power, dialogue and compromise between labor and management." He continued, "The period when unions are formed at companies is mainly when restructuring begins," adding, "If companies communicate well and share performance fairly in ordinary times, workers come to think they do not need a union." In the case of the Samsung Electronics performance-bonus controversy, which faced a strike threat in May this year before narrowly reaching a labor-management agreement, he diagnosed that insufficient communication before wage negotiations was a major cause.
Regarding the Yellow Envelope Act, he suggested the need for legislation to supplement its side effects. The Yellow Envelope Act was enacted with the aim of resolving the dual structure, in which the gap in working conditions is large between regular and non-regular workers, and between prime contractors and their subcontractors and partner companies. However, since its implementation, conflicts between the unions of subcontractors and partner companies and prime contractors have followed one after another. There are also points that industrial confusion continues, such as the Samsung Electronics union demanding labor-management-government consultation over the recently announced semiconductor infrastructure investment plan in the Honam region. On such situations, Lee pointed out, "Laws and systems must be suited to reality and, without conflicting with other laws and systems, be able to operate complementarily."
Lee diagnosed that problems arose because the Yellow Envelope Act was enacted without improving the reality of the dual structure in the labor market. "During periods of economic growth, small and medium-sized enterprises also had high wage-paying ability and working conditions improved, but as economic growth slowed, the gap between large companies and SMEs widened," he said. "Problems flared up as legislation was made in a 'pass-the-buck-to-the-prime-contractor' manner without breaking the dual structure of the labor market." On the direction of supplementary legislation, he explained, "The Trade Union Act must clarify the definition of employers, and along with supplementing bargaining procedures, regulations premised on company-level bargaining must be improved." He added, "To invigorate autonomous and independent bargaining between labor and management, there is a need to improve not only the Trade Union Act but also the Fair Trade Act, the Subcontracting Act, the Industrial Safety Act and the Serious Accidents Punishment Act, into a consistent 'package law' covering the entire industrial field."
Regarding the retirement age extension being pursued in political circles, he offered the view that reform of the wage system and permission for workers to hold second jobs are prerequisites. "Under current laws and regulations, matters accompanying disadvantages in working conditions require the consent of a majority of workers or the union," Lee said. "If a wage system linked to productivity is introduced, the meaning of extending the retirement age disappears." He continued, "One method is to make possible a form of 'two jobs' in which a worker works only three of five days and does other work for two days," adding, "If a flexible wage system is introduced instead of the rigid working style of the past, intergenerational co-prosperity over new hiring becomes possible."
