APERG: New Korean Administration to Liberalize Labor Policies
May 19, 2017
Our Asia-Pacific ally, APERG Executive Director Amy Lau, reports: "While we continue to wake up every morning with surprises in different corners of the world, at least the presidential election in South Korea on May 9 gave us a clearer path regarding this country going forward. During the election campaign, President Moon Jae-in stated that 'respect for labor' would be a key pillar and the new government 'will not compel sacrifice on the part of the workers for economic growth and will seek to build a nation where workers will be accorded due respect.' We can expect the new administration to implement the policy measures related to the four major labor policy initiatives on which President Moon Jae-in campaigned:
- "Society owned by workers: Such an initiative would include increasing the unionization rate and establishing a Chamber of Labor that would function as a de-facto union for workers who are not unionized but pay unemployment insurance.
- "Society where workers need not worry about poverty: The president's goals are to increase the minimum hourly wage to KRW 10,000 by 2020 (current rate is KRW 6,470—a 7 percent increase from previous year) and lengthen the statute of limitation for wage claims from 3 years to 5 years.
- "Society where non-regular workforce is reduced: It is expected that a new regulation limiting the grounds for using non-regular workers will be introduced, as well as a new law to eliminate pay discrimination between regular and non-regular workers.
- "Society where workers do not suffer fatalities in the workplace: The administration plans to implement stronger health and safety protections for subcontracted workers and impose strict penalties on employers who conceal industrial accidents.
It is expected that implementation of such policy measures will result in increased labor costs and potentially affect the tax regime, as the government may have to either increase corporate tax rates or reduce tax exemptions to fund such policy changes. We will continue monitoring the development of the new administration in South Korea and will keep APERG members posted." Should you be interested in joining APERG or in any particular area(s), please let APERG Director Amy Lau