Labor market flexibility

Labor market flexibility (노동시장의 유연성/勞動市場 柔軟性) refers to the state indicating how labor markets adapt to fluctuations and changes in society, the economy or production.

In general, the term is used by employers as a strategy to adapt to their production/business cycles and maintain the employment. For example, employees can be transferred to different activities and tasks within the firm. This can be achieved by job rotation or outsourcing activities.

On the other hand, labor market flexibility can potentially be used for both employers and employees. It can also be used as a method to enable workers to adjust working life and working hours to their own preferences and to other activities. As companies adapt to business cycles and facilitate their needs through the use of labor market flexibility strategies, workers adapt to their life cycles and their needs through it.

Key words
employment, flexibility, layoffs, job security, flexible working time, short-term contract-based workers

Korean situation
Labor market flexibility has been a hot issue since the democratization of society got the momentum in 1987. While hard line trade unions increased their influences to call for the revision of labor laws, both labor market flexibility and job security have dropped. 1997년 정리해고의 법제화, 근로기간제 도입 등을 명문화함으로써, 노동기본권 강화와 노동시장 유연성 강화를 맞바꾸는 방향으로 노동관계법을 개정한 바 있다. 역설적이게도 노동시장이 경직되다 보니 기업은 해고가 어려운 정규직 채용을 꺼리고 해고가 자유로운 비정규직, 임시직을 선호하는 경향이 나타났고, 정규직과 비슷한 일을 하면서도 급여수준은 반절 수준에 가까운 일도 발생하였다.

From 1998 to 2005, Korea ended up sacrificing flexibility without simultaneously making an improvement in security. Well-balanced combination and harmony of flexibility and security lies in whether Korea can find a key link setting in motion a virtuous cycle of flexibility and security. 수출을 기반으로 한 대한민국의 경제 특성상 인건비 감축을 통한 수출경쟁력 제고는 필수적인 만큼(독일의 사례. 제조업 공동화 현상), 비정규직과 정규직 사이의 노동자간 빈부격차 완화 역시 필요하다.

Because lack of job security leads to loss in the meaning of other types of flexibility and security, in order to achieve progress towards greater employment security, hiring and firing workers should be carried out freely and actively.

On the one hand, empirical results show that confrontational labor-management relations are major stumbling blocks to achieving flexicurity in the Korean labor market. Companies have difficulties in implementing restructuring especially due to trade unions. Therefore, on labor-management relations, putting an end to confrontation and building a win-win relationship is inevitable.

So far employment issues bring about confrontation between union and management. So companies need to minimize conflicts in industrial relations by improving wage and functional flexibility as well as numerical flexibility of employment. On the other hand, corporate investment leads to job creation. Accordingly, the government has to create a business-friendly environment while giving an increasing commitment to enhancing employment security and income security through active labor market policy, establishment of the social safety nets, and unemployment insurance system.

Statutory grounds
The Labor Standards Act (근로기준법) contains some provisions contributing to the labor market flexibility such as layoffs (정리해고제), flexible working time (변형근로시간제), etc.

First, Article 24 of the Act approved the layoffs necessary to overcome continuous deterioration of business operations, prompted by such managerial necessity to ensure improved productivity, technological innovation, change of line of business, etc.

구체적으로 개별 기업이 정리해고를 단행하려 할 경우 그 사유가 법조문의 사유에 해당하는지 여부에 대한 논란의 여지가 있으나 대법원 판례가 폭넓게 정리해고 사유를 인정하고 있어 사실상 사용자가 필요로 할 경우 대부분 정리해고가 가능할 것으로 보인다.

민법에서는 정리해고를 실시할때는 그러니까 일정 규모 이상의 인원을 해고하고자 할 때는 노동위원회의 승인을 받도록 규정하여 사용자의 해고권 남용을 견제하고 있고, 전제조건으로 '노조나 근로자대표회의의 성실한 협의', '해고 60일 전 통보', '2년 이내 근로자 고용시 해고자 우선 고용 능력' 등의 규제절차를 규정하고 있다.

Flexible working time (변형근로시간제) has been adoped by the Labor Standards Act. An employer who employs more than five workers may determine the working hours flexibly every two weeks within 48 hours a week. Article 51 (Flexible Working Hour System) of the Labor Standards Act
 * (1) An employer may have a worker work in accordance with rules of employment (or in accordance with rules or regulations equivalent thereto) for a specific week in excess of working hours prescribed in Article 50 (1), or for a specific day in excess of working hours prescribed in Article 50 (2), on condition that average working hours per week in a certain unit period of not more than two weeks do not exceed the working hours under Article 50 (1),provided that working hours in any particular week shall not exceed forty-eight hours.
 * (2) Where an employer reaches an agreement in writing with a workers' representative on the following enumerated items, the employer is allowed to have a worker work for a specific week in excess of the working hours under Article 50 (1), or for a specific day in excess of the working hours under Article 50 (2), on the condition that average working hours per week in a certain unit period of not more than three months do not exceed the working hours under Article 50 (1). However, working hours for a specific week, and for a specific day shall not exceed fifty-two hours and twelve hours respectively:
 * 1. Scope of workers subject to this paragraph;
 * 2. Unit period (a unit period not exceeding three months);
 * 3. Working days in a unit period and working hours for each working day;
 * 4. Other matters prescribed by the Presidential Decree.
 * (3) The provisions of paragraphs (1) and (2) shall not apply to workers aged between fifteen or older and less than eighteen, and pregnant female workers.
 * (4) If an employer needs to have a worker work in accordance with the provisions of paragraphs (1) and (2), the employer shall prepare measures to ensure that the existing wage level is not lowered.

Article 52 (Selective Working Hour System)
 * Where an employer has reached a written agreement on each of the following subparagraphs with of workers' representative regarding a worker who is entrusted with the decision as to when to begin and finish work in accordance with rules of employment (including those equivalent to rules of employment), the employer may have workers work in excess of the working hours per week set by paragraph (1) of Article 50, or the working hours per day set by paragraph (2) of Article 50 on the condition that average working hours per week computed on the basis of adjustment period not more than one month do not exceed the working hours prescribed in paragraph (1) of Article 50:
 * 1. Scope of workers subject to this paragraph (excluding workers between the age of fifteen and of eighteen);
 * 2. Adjustment period (a finite period not more than one month);
 * 3. Total working hours within an adjustment period;
 * 4. Starting and finishing time of working hours, if a mandatory work period is in force;
 * 5. Starting and finishing time of working hours which are allowed to be selected by workers;
 * 6. Other matters prescribed by the Presidential Decree. 노사가 서면으로 합의한 경우 4주 단위로 주당 56시간까지도 근로시간을 연장할 수 있다. 즉 4주 중 2주는 56시간씩 일을 시키고 나머지 2주는 주당 32시간만 시키면 연장근로 수당을 안 줘도 된다.

시간외수당 삭감으로 시간제 근로자는 6.4%, 월급제 근로자는 최대 2% 가량 임금이 줄어들 수 있다. 이 제도로 인한 임금저하시 보전방안을 강구하게 되어 있으나 그의 실효성은 의문이다.

On the other hand, the Act on the Protection, etc. of Dispatched Workers (파견근로자보호 등에 관한 법률) has been implemented to protect the rights and benefit of short-term contract-based workers.

Flexibility for Experienced Workers
Heightened competition and shorter product life cycles are compelling companies to hire experienced workers in the hopes of gaining the abilities needed to produce fresh ideas and drive new ventures. At the same time, irregular or contract employment is more prevalent and workers are increasingly willing to sacrifice job security for better perks and more opportunity for personal growth.

While these dynamics appear to mesh for an efficient job market for experienced labor, both management and workers often end up losing because companies fail to smoothly absorb experienced personnel.

Companies realize the value of mentoring inexperienced employees, but they give scant attention to newly hired experienced personnel, assuming they already possess the tools to adapt. In reality, the latter workers often find it more difficult to assimilate. To make matters worse, they are quick to move on if they don’t reach a personal comfort level, resulting in lost time and effort for everyone concerned. The main culprits usually are misperceptions and faulty assumptions between the employer and experienced employee.

Generally, employees who are quick to adapt to an organization all have the commonality that they have established expansive official and unofficial human networks during the early stages. To aid this, 3M, the sprawling U.S. maker of household and office products, regularly holds technical forums for its engineers to help them broaden their networks, exchange specialized knowledge and promote new ideas.

Ultimately, a company must aggregate the skills and know-how of both newly hired inexperienced and experienced employees, and steer the whole organization toward the same goals and strategies. In addition, experienced workers need to be given opportunities to advance, just as inexperienced cohorts are groomed to climb the corporate ladder. This will help establish a happy equilibrium and foster high morale and a sense of belonging among all hires.