Unionized workers of Samsung Electronics Co. hold a rally at a plant in Hwaseong, south of Seoul, on July 8, 2024, ahead of the launch of a three-day strike. (Image courtesy of Yonhap)
SEOUL, Jul. 23 (Korea Bizwire) – A recent survey has revealed that more than half of foreign-invested companies in South Korea perceive the country’s overall labor market as inflexible, potentially impacting future investment decisions.
The Federation of Korean Industries (FKI) conducted a survey from April 2 to 12 through Mono Research, targeting 538 foreign-invested manufacturing companies with 100 or more employees in South Korea.
Of the 100 respondents, 53% described the Korean labor market as “rigid,” while only 9% considered it “flexible.” The remaining 38% viewed it as “average.”
When asked to compare South Korea’s labor regulations with those of major developed countries such as the United States, Japan, and Germany, 47% of respondents said South Korea’s regulations were “stricter.” Only 13% found them “less strict,” while 40% considered them “similar.”
The survey also explored perceptions of labor-management relations in South Korea. A significant 63% of responding companies characterized these relations as “confrontational,” with merely 4% describing them as “cooperative” and 33% as “neutral.”
In a comparative assessment, respondents rated South Korea’s level of labor-management cooperation at 100, while scoring Germany at 124.8, the United States at 121.4, Japan at 116.2, and China at 89.7.
The National Samsung Electronics Labor Union (Image courtesy of Yonhap)
This indicates that South Korea is perceived to lag behind major competitors in labor-management cooperation, except for China.
Notably, 68% of the surveyed companies stated that they significantly consider South Korea’s labor environment, including labor-management relations and regulations, when formulating mid to long-term business plans.
The survey revealed a potential for increased investment if labor market conditions improve. Respondents indicated they would increase investments by an average of 13.9% if South Korea’s labor market flexibility were to match that of the G5 countries (U.S., Japan, Germany, the U.K., and France).
“The rigid labor market and confrontational labor-management relations in South Korea exacerbate uncertainty for foreign investors, making them a significant risk factor in business planning compared to other major countries,” the FKI analyzed.
When asked about their biggest challenges related to labor issues, 42% of companies cited “difficulties in employment adjustment, such as dismissals and transfers.” Regarding union activities, 37% identified “militant activities that refuse dialogue and compromise” as the most urgent area for improvement.
Sang-ho Lee, vice president of the Economic and Industrial Research Department at the FKI, emphasized, “South Korea’s inflexible labor market and confrontational labor-management relations have long been considered major obstacles to attracting foreign investment.”
He advocated for reducing labor market rigidity through measures such as easing regulations on working hours and dismissals, while cautioning against legislative changes to union laws that could further intensify labor conflicts.
M. H. Lee (mhlee@koreabizwire.com)
