BUSAN, Republic of Korea (ILO online) – Asian nations face a tremendous challenge to develop an inclusive labour market which provides appropriate security for workers while maximizing the benefits of globalization and flexibility, according to a recent ILO report*.
Despite good news about declining poverty rates and impressive job creation in IT-related industries in many countries in Asia, there is concern about the increasing use of ‘non-standard employment’, outsourcing and poorly developed social security systems in the region.
“The optimists argue that a rising tide will lift all boats. The pessimists, however, say that the new jobs created in the so-called knowledge economy are often inferior or of questionable quality”, explains Sangheon Lee from the ILO’s Conditions of Work and Employment Department.
According to the ILO expert, the Korean experience over the last years lends valuable insights, particularly on the nature and scale of the challenge. Notable efforts have been made in the Republic of Korea to upgrade job quality for more workers through policy initiatives such as minimum wages, employment insurance, and training programs. What’s more, social dialogue has been encouraged to address issues which may arouse sharply different views among the social partners.
In terms of ‘lessons learned’ and decent working conditions, two issues are particularly relevant in the regional context: working time and non-standard employment. The reduction of statutory working hours from 44 to 40 hours per week was an important achievement in the Republic of Korea, where working hours are the longest of all OECD countries. With about 2,400 hours per year in 2005 Korean workers work about 75% longer than their Dutch colleagues and also exceed the number of hours worked in other countries in the region.
Social dialogue is the bedrock of decent work
The Korean experience suggests the importance of legal initiatives in countries where collective bargaining is underdeveloped or fragmented, as is the case in most Asian countries. A three-way national dialogue between employers, workers and the Korean Government played an important role. In 2005, for the first time in history, a large majority of workers were working less than 50 hours per week, and more workers are expected to follow the example in the coming years.
Yet, as in many other countries, due to inefficient enforcement of the rules, many Korean workers still work longer than the statutory normal hours and even statutory maximum hours (including overtime). Another challenge which many other countries face is that workers who need legal protection most are likely to be the group of workers who benefit least from the 40-hour working week.
Long working hours tend to be found most often in small enterprises and among ‘non-standard’ workers, such as temporary and occasional workers. It is estimated that in 2005, these workers were working about 12 per cent more, but earning about 50% less than the others. The working hours and wage gaps appear to have increased over the years.
“Spreading the benefits of the new standard hours to these ‘non-standard’ workers thus remains an important policy challenge for the social partners in Korea”, says Sangheon Lee.
The second key issue - non-standard employment - is probably the most controversial labour market issue in Korea. Estimates of the size of non-standard employment, including temporary and occasional employment, vary depending on the definitions used, but even the lowest estimate exceeds 35%, with an increasing trend since the Asian financial crisis in 1997.
“This is not just a matter of employment security. It has wider implications for employment conditions and job quality. An intensive social dialogue aimed at establishing an inclusive labour market is under way. The outcome is yet to be seen, and the obstacles involved are huge”, comments Sangheon Lee.
Given the trend towards flexible work in the region, the debate on non-standard employment is not confined to the Republic of Korea. Heated discussions on the issue are still going on in Japan and in Australia, which recently introduced a new labour law on ‘work choices’. Developing and transition countries in the region, such as China, the Philippines and Malaysia, also face pressure to legalize more flexible types of employment or remove the constraints placed on their use.
In the developing countries in the region, the debate on ‘non-standard’ employment has something of a paradox. “The fact is that ‘standard’ employment has never been ‘standard’ in these countries. With a majority of workers in the informal economy, workers with standard employment relationships have always been a minority”, explains Sangheon Lee.
Finding a new balance
Asia has benefited more than most regions of the world from rapid economic integration and its high level of labour market flexibility has certainly contributed to its remarkable economic success. During the recovery after the financial crisis in the late nineties, the use of temporary employment has been legally recognized and hiring and firing have been made easier in many countries.
“But globalization and flexibility do not necessarily imply a lower level of security and protection for workers. New and flexible forms of security are needed to encourage workers to adapt the changes at the workplace. It would be a mistake to see flexibility and security as a trade-off -- what is needed is to develop a complementary relationship between the two”, concludes Sangheon Lee.
As global economic integration proceeds, the Korean experience could be a lesson for other countries in the region. Its Asian neighbors are watching closely the Republic of Korea, hoping that it will show the way to creating an inclusive labour market through social dialogue.
* Lee, Sangheon and Wood, Alan. “Changing patterns in the world of work in Asia: an overview”, in Burgess, J. and Connell, J. eds. Globalisation and Work in Asia. Chandos Publisher (forthcoming, 2006)
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