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Korea Observer 49-1 4차편집본 Union Strategy to Revitalize Weakening Worker Representation in South Korea 83 Union Strategy to Revitalize Weakening Worker Representation in South Korea* Hyung-Tag Kim**, Young-Myon Lee*** The rapid growth of South Korea's labor unions after 1987 Great Labor Offensive has been considered as one of the highest achievements in labor movement history. Yet now the social influence of labor unions in South Korea has been starkly reduced. For example, wage gaps between regular and non-regular workers and between workers at large and small companies have expanded, and union density as well as the application rate for collective agreements has fallen to about 10%. Rapid and dramatic changes in industrial structure and employment types coupled with regulatory limitations to collective agreement protections and application have reduced the appeal of union membership for many. And Korean unions have not seemed to adapt: although union membership is markedly industry-level, collective agreements are applied and managed within a traditional company-level IR framework. Unionism in South Korea needs urgent revitalization. The authors recommend this revitalization should proceed through institutional changes for improving workers' representation and through more also active organizing activity, but primarily it should happen through restoring a sense of solidarity among workers in the most basic sense. Key Words: labor union, employee representation, union revitalization strategy I. Past History and Current Status of Unionism in South Korea After the Great Labor Offensive during 1987 – 1989, Korea labor union movement achieved worldwide fame with its militancy. It had been considered as a successful example of creating new horizon under the situation of declining global labor union movement with such as COSATU of South Africa and CUT of Brazil. But now, labor * This work was supported by the Dongguk University Research Fund in 2018. ** First Author. Dongguk University-Seoul, 04620 Seoul, South korea; Email: [email protected] *** Corresponding Author. Dongguk University-Seoul, 04620 Seoul, South korea; Email: [email protected] KOREA OBSERVER, Vol. 49, No. 1, Spring 2018, pp.83-105 © 2018 by INSTITUTE OF KOREAN STUDIES. https://doi.org/10.29152/KOIKS.2018.49.1.83 84 Hyung-Tag Kim, Young-Myon Lee unions in South Korea have faced not only a significant decline in the social status, but also under-appreciated legitimacy by workers and even by society in general. In 1970s and early 1980s, the labor union movement in South Korea was led by low-paid female workers who were employed primarily in light industries such as textile industry under the banner of 'Exports Competitiveness' led by the Korean Government. Since July 1987, however, the struggles for union democratization and organizing new unions arouse like wildfire. The advent of large enterprise unions particularly in the heavy and chemical industries started to grow since 1970s changed the aspects of former light industry worker-led labor movement. The area of movement based on the solidarity of small-size manufacturing workplace unions was enlarged to the areas of office, media, hospital, public sector and so on. In addition, the large manufacturing enterprise unions became to lead the labor movement. South Korea's economy showed double-digit growth for three consecutive years from 1986 to 1988. There was 'three lows' phenomenon (low interest rate, low oil price and low dollar exchange rate) which opened the special boom in South Korea economy. While the entire world-level economic situation is difficult, South Korea acquired high export competitiveness with 'there lows' phenomenon. Also the year of 1987 opened politically democratic space by the victory of civic democratization struggle. The struggle produced a direct presidential election system, which were an indirect system until that time. Just after the winning of democratization struggle, workers began to protest collectively at many workplaces to breach the forced low-wage structure for export competitiveness. Within a three month period, the struggles of the workers were deployed all across the regions and industries. For the period of 1987 to 1989, union density has climbed up close to 20% and wages have risen massively in all industries. But that prosperity did not last long. Korean economy joined the flow of long-term global economic recession. South Korea's current accounts in the 1990s were converted into continuous deficits except for 1993. Since 1998 the currents account back into surplus. But it was a phenomenon due to a slump in domestic demand, not a competitiveness recovery. To accommodate the changes in competitive environments, employers began to change labor market strategy. They segmented relatively homogeneous workers into the internal labor market and the external labor market. Then they made a collective contract relationship through appropriate compromise within the internal labor market and shifted increasing cost burdens to the external labor market. But employers steadily reduced Union Strategy to Revitalize Weakening Worker Representation in South Korea 85 the volume of internal labor market by introducing such as forced layoffs and outsourcing. On the other hand, large companies passed cost burdens to the medium and small-size firms through the structure of contractor-subcontractor frame. Labor market segmentation has resulted in a serious disaster for the workers in general. The role of large unions for providing high-level wage guidance to all workers has disappeared. No matter how militantly the union-based regular full-time workers fought with employers, the working conditions of non-regular and small-and-medium sized company workers were not improved. It gets worse just like a zero-sum game. National and industry-level labor union organizations emphasize every year that the task of organizing temporary workers into unions is their key movement goal. However, at the bottom of workplaces, the stories are totally different. Non-regular workers exist to reduce labor costs for employers and moreover they are buffers for regular workers against the damages caused by restructuring. The strategy to overcome these problems through the industrial unionism has not yet achieved the results. Although nominally industrial unions, they still hold collective bargaining at the firm level. Collective agreements cannot be extended beyond the workplace, but are applied only to members. Korea's union organization rate and collective agreement application rate remain at about 10%. Low rates of union density and collective agreement increase wage income inequality (Son 2014, 36; Kim and Yoon 2015, 22). As the labor unions of the big companies raise their wages harder, the wage inequality among the workers is increasing. The bargaining power of large company organized labors has not only caused wage polarization, but also impeded the development of the welfare system in Korea. By focusing on corporate welfare, social welfare which can be realized through solidarity is ignored. This resulted in a failure to enforce the government's efforts to realize a universal welfare state (Yang 2013, 471). It shows that if labor unions do not secure the representativeness of the entire workforce, democracy of society as a whole will not function properly. In order for Korea's labor unions to function as a representative organization for workers, it is essential to increase the union density and the application rate of collective agreements. The purpose of this article is to examine the reality of the Korean unionism in relation to the representativeness and what efforts and strategies are needed to achieve them. 86 Hyung-Tag Kim, Young-Myon Lee II. Labor Unions and Employee Representation A. Unions' Weakening Role for Worker Representation The role and function of trade unions in Western countries was discussed from the perspective of industrial democracy (Webb 1897). Later, the Hirschman (1970)'s voice- exit-loyalty theory emphasized positive features of the voice and the voice mechanism was actively examined in many academic fields including industrial relations. Freeman and Medoff (1984) claimed that trade union has two faces: monopoly face and collective voice face. They also connected the voice to the union representation, especially for the union's role for the collective arrangement. They argued that labor union is the best agent for providing collective voices of the workers. They also argued collective voices of the workers took positive roles for the company as well. Since then, from the view of mainstream economics, researches have been conducted broadly on how unions affect the performance of companies. Although the results of the study are not consistent, there are many studies that union has negative effects on financial performance at least. Hirsh (1991, 12) researched the effects of unions on the profitability of the 705 United States companies in the 1970s. He reported that the company with union has 10-15 percent less market value and less profit, when compared to companies without union. Ryoo (2007, 41) reported that the union reduced corporate profit levels, as measured by per capita income of employees up to 20 to 40 percent. Lee and Cho (2011, 70) also reported that labor union lowers the degree of company's profitability by 2.7 ~ 4.7 % when the profitability is measured by operating profit to capital management. These negative evidences of labor union in financial performance lead employers to choose the
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