Revisions to laws related to the Tripartite Commission should be reconsidered

- 2003.11.17. Government-Proposed Bill No. 162940: Partial Amendment to the Act on the Establishment and Operation of the Tripartite Commission -

1. Content and Significance of the Legal Amendment

Since the Tripartite Commission was established, the government’s biggest complaint has been that its operations have not been efficient because decision-making is based on a tripartite consensus model. In other words, because the laws related to the Tripartite Commission are founded on the spirit of tripartite agreement, it has in practice been difficult to legislate labor-related policies desired by the government.

Accordingly, in November of last year, the government prepared a “Bill to Amend the Act on the Establishment and Operation of the Tripartite Commission” and has been pushing for its enactment. While the government’s intentions in pursuing this amendment are understandable, it should be pointed out that if the law is amended as the government intends, the side effects that follow will be very significant.

The main points of the proposed amendment are as follows.

First, in order to promote consultations among workers, employers, and the government by industry and by region, support for projects to promote tripartite cooperation by industry and region is added to the matters subject to consultation by the Tripartite Commission. Second, when the chair of the Tripartite Commission deems it necessary, the heads of relevant central administrative agencies, among others, may be designated as members and allowed to attend meetings. Third, regarding the quorum for resolutions, under the current system, when the Tripartite Commission passes a resolution, in addition to requiring the attendance of a majority of registered members and the approval of at least two-thirds of those present, at least half of the members representing workers, employers, and the government, respectively, must all be present. The proposed amendment would allow matters concerning consultation procedures of the Tripartite Commission, and matters to be prescribed in its operating rules, to be resolved solely by the attendance of a majority of registered members and the approval of at least two-thirds of those present.

2. Problems with the Legal Amendment

First, the addition of support for projects to promote tripartite cooperation by industry and by region can be interpreted as an intention to have the Tripartite Commission discuss even detailed issues relating to specific industries and regions. In other words, it may be seen as an attempt to enable the Tripartite Commission to adopt binding resolutions even on matters concerning individual firms.

In the past, the Tripartite Commission could, for example, discuss financial restructuring, but it was difficult to address the problems of individual banks. In that sense, such a measure could be viewed as necessary from the standpoint of efficiency and policy effectiveness. However, several problems arise here. First, if binding resolutions are adopted regarding individual firms or institutions, the most important meaning of collective bargaining—the cultivation of autonomous bargaining capacity between labor and management—will be undermined. In that case, rather than resolving problems through autonomous bargaining, labor and management at individual organizations will become habituated to relying on the government, and it is easy to foresee that the chronic weakness of Korea’s labor relations—namely, the lack of autonomous bargaining capacity—will worsen further in the future. In addition, there will be the side effect of strengthened government intervention in individual organizations under the pretext of the Tripartite Commission.

Likewise, allowing the heads of relevant central administrative agencies to be designated as members of the Tripartite Commission and to attend meetings appears, in this same context, to reflect an intention to strengthen government intervention in labor relations. However, on major issues related to labor relations, it would be more proper for decisions to go through Cabinet deliberation rather than the Tripartite Commission. As noted above, it would be preferable for important aspects of labor relations to be handled according to law and with firm government conviction, while the Tripartite Commission should continue to exist, as it does now, as a consultative body. Even if one concludes that “nothing gets done and nothing is blocked” in the Tripartite Commission, it is important from a long-term perspective to accumulate a practice of respecting the spirit of tripartism for the development of labor relations. It would be good if the Tripartite Commission could reach agreement, but if that proves impossible, most citizens would agree that the proper course is for the executive branch—or, where legislation is required, the National Assembly—to handle the matter. In principle, even if an agreement is reached in the Tripartite Commission, it is only natural that the final judgment should be made by the government or the National Assembly.

As seen in the tripartite systems of advanced countries, for the Tripartite Commission to perform its proper role, national consensus and procedural legitimacy are required. In this light, the proposed amendment concerning the quorum for resolutions contains serious problems. Presumably, the government has attempted to amend the quorum rules because it sees the Commission’s consensus-based character as making “resolutions” difficult. But in that case, the Tripartite Commission would be forced to abandon its role as a consultative body. That is, it would become possible for the government to push through resolutions even when workers or employers—the actual parties concerned—hold differing views.

Such a system would mean abandoning the Tripartite Commission’s general character as a consultative body on economic and social issues and instead making it easy for the government to secure “resolutions” according to its own will even on industry-specific and region-specific issues without agreement from labor and management, the parties directly concerned. In effect, this would amount to giving up the advanced-country model of tripartite institutions. Furthermore, it can only be seen as a deterioration, not a reform, because it would make it even more difficult to build national consensus and procedural justice around the Commission’s resolutions. No country has succeeded with a tripartite body under such a system. In other words, it is little different from saying that the government intends to intervene in every labor-management issue involving individual cases. Rather than this, it would be better for the government to pursue labor-relations reform without relying on the Tripartite Commission.

One additional point should be made. Given that it is difficult to deny the reality that the current membership of Korea’s Tripartite Commission is excessively tilted toward labor unions, efforts are required to improve this in order to gain national consensus. In light of the composition of the Commission, it must be acknowledged that the proposed amendment to the quorum-related rules is unpersuasive.

3. Factors Hindering the Smooth Functioning of the Tripartite Commission

The reason the Tripartite Commission was unable to play its proper role on restructuring issues in the Financial Special Committee or the Public Sector Special Committee was not that the Tripartite Commission Act prohibited discussion of individual workplaces. Rather, it was because the government’s position on restructuring was not firm, or because it lacked a clear blueprint. In the case of Chohung Bank, the reason why even discussion of restructuring could not take place in the Tripartite Commission was President Roh Moo-hyun’s political decision.

To simplify the matter, when the government’s policy objective is clear—especially in cases such as restructuring banks into which public funds have been injected—the government or the Public Fund Oversight Committee can discuss it. Insisting on discussing and resolving such matters in the Tripartite Commission may, in a favorable light, be interpreted as respecting the views of labor and management during restructuring and seeking to minimize the problems associated with layoffs. However, when a matter has a serious impact on the national economy or involves the injection of public funds, the proper course is for the government to establish principles and carry out restructuring. Allowing the Tripartite Commission to handle such matters may instead be seen as a populist idea whereby the government delegates its own responsibilities to the Commission so as not to be blamed by anyone. In this context, it is difficult to understand the intention to have the Tripartite Commission deal even with industry-specific and region-specific matters.

4. Conditions for the Success of Tripartism and Problems with Korea’s Tripartite Commission

In advanced countries where tripartism has developed—especially the smaller strong economies—it is customary for the government or parliament to accept proposals adopted by labor, management, and government, or by labor, management, and the public interest, within tripartite institutions. Korea as well should set this as the ultimate goal of tripartism.

Austria’s Price Commission and Wage Commission, which have a tripartite structure, make recommendations on wage increases, and the government has never failed to accept them. Singapore’s National Wage Council also makes recommendations on wage increases, but the method has changed from presenting specific numerical rates or ranges of appropriate wage increases in the past—that is, quantitative terms—to more qualitative guidance such as “wage increases should be restrained” or “it is desirable for wage increases to follow productivity with a time lag.” These recommendations of the National Wage Council are not only persuasive but are also adopted in the wage-setting process at individual firms. In these countries where tripartism functions well, it is understood that trust among committee members and accumulated personal relationships facilitate agreement and play a major role in building national consensus around such agreements.

A characteristic of tripartite institutions in advanced countries is that labor, management, and government—or labor, management, and public-interest representatives—deliberate on economic and social issues and make recommendations to the government and parliament, while the government then pursues policymaking and legislation based on the results of those consultations. Moreover, discussions in tripartite institutions do not presuppose consensus. That is, they seek agreement only on basic principles and directions and do not discuss specific statutory language or detailed provisions. Decisions made in tripartite bodies are not legally binding on the government or parliament, and the emphasis is placed on consultation among the social partners. However, the more developed tripartism is in a country, the more smoothly agreements are in fact reached in tripartite institutions, and the more rarely those agreements are rejected by the government or parliament.

For such practices to become established, several preconditions are required. In other words, for a tripartite institution to function well, it must enjoy national consensus or social agreement, and its operation must also possess procedural justice.

Korea’s Tripartite Commission was launched as a social consultative body modeled on the labor-management consultation systems of advanced countries, especially the Netherlands, in order to overcome the economic crisis, but evaluations of it differ. First, it cannot be denied that during the IMF economic crisis, the Tripartite Commission faithfully played a buffering role in overcoming conflict structures and became a driving force for social integration. However, the prevailing assessment is that afterward it failed to resolve conflicting interests and disputes among interest groups. This may be attributed not so much to poor operation of the Tripartite Commission itself as to the general backwardness of Korea’s labor relations. The Korean Confederation of Trade Unions criticizes the Tripartite Commission as a mere prop for neoliberal restructuring, while some in the business community criticize it as a collectivist market intervention mechanism that runs counter to the market economy.

5. The Future Direction of the Tripartite Commission

From a long-term perspective, the Tripartite Commission should remain faithful to its function as a consultative body, and it is not desirable to force agreement on issues where interests are sharply opposed. In other words, it is not the right direction for the Tripartite Commission to be obsessed with legally binding “resolutions.” Moreover, the government must realize that if it resorts to the expedient of achieving binding “resolutions” through a kind of pairing-style alignment between labor and government or between employers and government, the procedural justice of such resolutions can rightly be called into question. As in advanced countries, it would be desirable for the Tripartite Commission to engage in sufficient consultation among interested parties and strive to reach agreement on that basis, but even where no agreement is reached, to limit its role to reflecting in the policy decision-making process the views of labor and management on the basic principles and directions that emerged through consultation. For example, on forward-looking reforms of labor relations or labor law, it would be proper for the Tripartite Commission to deliberate, while efforts are made to build national consensus and turn those reforms into legislation in the National Assembly.

6. The Amendment of Laws Related to the Tripartite Commission Should Be Reconsidered

The proposed amendment to the laws related to the Tripartite Commission is highly likely not only to deepen fruitless controversy and the rifts in conflict among labor, management, and government, but also to run counter to tripartism itself. In light of the realities of the Korean economy today, the amendment must be reconsidered. Rather than amending the law, the government should accurately understand why tripartism functions smoothly in advanced countries and should place policy emphasis on acknowledging and correcting the labor-union bias in the composition of the Tripartite Commission. Furthermore, it is hoped that the government will correctly recognize why the Tripartite Commission is not functioning well at present and take an interest in the fundamental development of tripartism in Korea.

Jaewon Kim (Professor of Economics, Hanyang University)

Wiki:

https://www.cfe.org/w/bbsDetail.php?idx=71

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Original title: 노사정위원회 관련 법률의 개정은 재고되어야 한다

Author: Jae-won Kim

Date: 2004-02-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=bill&pn=4&idx=25828