South Korea’s parliament convened a much delayed session yesterday, placing high on its agenda a law that could add greater flexibility to a rigid labor market by lengthening the terms of employment for contract workers.
South Korean President Lee Myung-bak and his conservative ruling Grand National Party (GNP) have proposed a raft of reforms they say are needed to steer the export-driven economy through the global economic downturn, but have seen measures delayed in previous sessions because of demonstrations and scuffles among members of parliament (MPs).
South Korea lost 169,000 jobs in the first five months of this year — the biggest loss since the Asian financial crisis a decade ago — and further losses would chill prospects for recovery and deal a blow to Lee, who has seen his support rate fall in recent months.
“If the labor law is not passed, more than 1 million employees will lose their jobs. This is a political bombshell,” a senior GNP member said.
Union leaders said the number of job losses would be far less.
South Korea will face massive job losses when the current law on temporary workers expires on July 1. Under the law, firms can hire contract workers for up to two years and then must decide whether to make them permanent employees or release them.
The GNP, with a majority in the National Assembly, hopes to double the term to four years. This would give companies more flexibility during uncertain times and mean contract workers may have more chance of being retained for longer.
Debate on the bill is expected for next week with analysts saying they expect some sort of temporary compromise that revises the current measure to allow employers to keep contract workers on their payrolls a bit longer, perhaps up to three years.
Economists said employers in South Korea were worried about taking on permanent labor because of the high costs and difficulties in laying them off, and have been pressing for ways to expand the temporary workforce.
MPs from the opposition Democratic Party, who have staged a sit-in protest in an attempt to physically block parliament from meeting, oppose the law because they say it will make prospects for job security and decent wages far more difficult for an increasing segment of the workforce.
The liberal Democrats have seen their support rate increase in recent weeks after many in the public blamed Lee and the GNP for a graft probe of former South Korean president Roh Moo-hyun that may have led to his suicide.
South Korea’s financial markets, used to the political polarization and delays in parliament, have not set their hopes too high on any major reforms being implemented quickly.
Another contentious law pushed by the GNP is a bill allowing for the cross ownership of newspapers and broadcasters.
The Democrats called it an “evil law” that would end the independence of TV broadcasters, which currently receive state funding. The GNP says it will help modernize a broadcasting industry that has become too dependent on government handouts.
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