No Future for the Korean Economy Without Labor Reform

The Korean economy is in crisis. With political uncertainty also rising, anxiety is running high. The government and political circles have offered various solutions, but they are either ineffective or misguided prescriptions aimed merely at winning popularity. The solution to breaking through this situation lies in labor reform. The economy cannot be revived without addressing the fundamental problems that are blocking our society’s growth.

Labor reform is a hurdle that must be overcome for economic recovery. This is because the Korean economy’s path forward has been blocked by increasing rigidity in the labor market. The business community has also voiced the urgent need for labor reform, but the political establishment has turned a blind eye. Instead, it has increased labor-related regulations. As these regulations have taken hold in earnest, the Korean economy has sunk into a deep mire and its growth momentum has weakened.

To settle for a rigid labor market is tantamount to choosing mutual destruction. Policies aimed at protecting regular workers may seem at first glance to safeguard workers’ rights, but in reality they are bad policies that eliminate workers’ place in the labor market. They have serious side effects that hinder business innovation and growth, and ultimately prevent the creation of good jobs at large firms in our society.

The true meaning of labor reform is labor market flexibility. Creating a flexible employment structure that can respond swiftly to market changes is an essential condition for market competition. Companies that must constantly innovate and compete in line with changes in the global market are being left unable to move because of labor regulations, so Korea’s prolonged low-growth trend is a natural consequence. We must face the fact that a rigid labor market, which deprives young people of new jobs and blocks corporate growth potential, is the biggest obstacle to the Korean economy.

The National Assembly bears much of the blame. A stream of misguided laws has been passed, including regulations on working hours and the Serious Accidents Punishment Act. Now it is also pushing ahead with the union law, the Yellow Envelope Act (Revised Labor Commission Act), which encourages illegal strikes and paralyzes business management. The more the National Assembly hands out privileges to the Korean Confederation of Trade Unions, the more the economy will shrink, threatening the lives of the public and workers alike.

The methods of struggle used by unions that are constantly engaged in political battles must now change into labor activity at a global standard. They must break away from anti-business struggles that sacrifice companies for political purposes. They should contribute as members of companies to producing results. They must also move beyond the narrow-mindedness and selfishness of strengthening privileges while protecting only their own vested interests. As members of our society, they should cooperate in creating an environment in which young people can be offered jobs with higher wages.

Without labor reform, there is no future for the Korean economy. Job creation through labor reform is the fundamental solution. I hope our society can overcome the obstacle of labor rigidity and move toward economic recovery.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 노동개혁 없이 한국경제 미래 없다

Author: Sung-no Choi

Date: 2025-01-23

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=27292