Academic journal article Journal of East Asian Studies

Corporate Unionism and Labor Market Flexibility in South Korea

Academic journal article Journal of East Asian Studies

Corporate Unionism and Labor Market Flexibility in South Korea

Article excerpt

There is significant variance in the strategies of labor market flexibility under the same pressure of globalization. This article attempts to explain that variance by examining closely the Korean case, with particular attention to the response of labor, one of the most intractable actors in the reform process. After theorizing the nature of social welfare as a quasi-collective good and hypothesizing labor's responses based on Olson's theory of collective action, the study seeks to explain Korea's low commitment to flexicurity and the resultant dualism in the labor market. The core argument here is that the collective action problem among atomized corporate unions has led to high employment protection for regular workers in big business at the expense of marginal workers without appropriate social protection.

KEYWORDS: South Korea, corporate unionism, big business, collective action problem, globalization, flexibility, labor market, flexicurity, employment protection

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The postwar social contract was predicated on securing risk pooling, social equity, and redistribution through such welfare programs as pensions, unemployment benefits, and health care. But the social contract was not confined to the provision of the welfare state. It was extended to the idea of labor market protection. Institutionalization of collective bargaining on wages and working conditions, as well as legislation protecting jobs and basic employees' rights, exemplify such trends. (1) Thus, it can be said that the welfare state and labor market protection have grown in tandem.

Since the 1980s, however, profound changes have taken place. Waves of globalization have begun to threaten the foundation of the postwar social contract, calling for a renegotiation on the conditions of the welfare state and on labor market protection. (2) Especially in Europe, labor market protection became one of the major issues of the renegotiation, since it is believed to be responsible for the high level of unemployment and for reduced competitiveness. Globalization has been exerting the same pressures for greater flexibility on the developing world. (3) Gradually, labor market flexibility became a norm, and many countries pushed forward with reforms aimed at greater flexibility in the use of labor to enhance competitiveness in the world market. The 1997 financial crisis and subsequent neoliberal labor market reform in South Korea offer a classic example in this regard. The Korean government deregulated the labor market to facilitate corporate restructuring and economic recovery.

Nevertheless, there is significant variance in the nature, perspectives, and strategies of labor market flexibility. Countries have employed very diverse reform strategies, from comprehensive reform packages--notably in Denmark, Finland, and the Netherlands--to reforms more narrowly targeted on specific fields. Even the same reform strategies have produced different outcomes. (4) Why have similar preoccupations by policymakers under the uniform pressure of globalization resulted in various responses and industrial market outcomes? This article attempts to explain these variations by closely looking at the Korean case with special emphasis on the response of labor to the pressure on labor market flexibility. As many studies point out, state strategies vary by internal political dynamics led by labor, one of the most intractable actors in the reform process. (5) Intensified competition and the accompanying threat to employment and income security stimulate workers' interest in and reliance on the traditional function of trade unionism as a protective mechanism. (6) Therefore, analyzing labor's response and behavior is one of the keys to understanding the diversity of national labor markets in the globalization era.

In this study, I draw on the logic of rational choice institutionalism, which focuses on the action and interaction of relevant actors based on each actor's preference and interest framed by institutional setting. …

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