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Cablegate: Korea Passes Non-Regular Worker Bills

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DE RUEHUL #4194/01 3410844
ZNR UUUUU ZZH
R 070844Z DEC 06
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC 1797
INFO RUEHBJ/AMEMBASSY BEIJING 1707
RUEHKO/AMEMBASSY TOKYO 1806
RHHMUNA/CDR USPACOM HONOLULU HI
RUALSFJ/COMUSJAPAN YOKOTA AB JA
RHMFIUU/COMUSKOREA J2 SEOUL KOR
RHMFISS/COMUSKOREA J5 SEOUL KOR
RHMFIUU/COMUSKOREA SCJS SEOUL KOR
RHEHNSC/NSC WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC//OSD/ISA/EAP//

UNCLAS SEOUL 004194

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ELAB PGOV PREL KS
SUBJECT: KOREA PASSES NON-REGULAR WORKER BILLS


SUMARRY AND COMMENT
-------------------

1. (SBU) After two years of delays and debate, the ROK
passed three labor bills to address wage and benefit
discrimination against non-regular workers who comprise more
than one-third of the workforce in Korea. Although the bills
layout a clear path for non-regular workers to become regular
workers after completion of a two-year contract, the bills
continue to receive opposition from the second largest trade
union umbrella group as well as the Democratic Labor Party
(DLP) who both feel the bills will only cause the number of
non-regular workers to increase and allow employers to
exploit wide loopholes that were never closed. The passage
of the bills in the current political climate marked a win
for the Roh administration as the ruling Uri Party and
opposition GNP Party came together in support of the final
affirmative vote, leading some pundits to speculate that
there is still some chance left for the Roh administration to
pass key legislation. END SUMMARY AND COMMENT.

2. (SBU) The National Assembly approved three labor bills on
November 30 after discussions between labor, management and
the government dragged on for the last two years. The bills
that go into effect starting in July 2007 ban companies from
discriminating against non-regular (part-time or temporary)
workers whose duties and productivity are comparable to
regular workers in terms of wages. Currently, non-regular
workers' wages are typically half of their regular worker
counterparts. Non-regular workers are also rarely afforded
benefits such as social insurance or pensions.

BACKGROUND ON NON-REGULAR WORKERS
---------------------------------

3. (SBU) The broader issue being contested is the nature of
non-regular work in Korea. In their efforts to develop a
dynamic and robust economy, Korean employers adopted the
practice of using temporary workers to maintain a more
flexible workforce. Temporary workers are not only less
costly than regular workers, but when work slows down, they
can be dismissed with no fear of legal repercussions. The
result is that the current workforce in Korea is comprised of
5.45 million non-regular workers, an enormous 35.5 percent of
the total workforce. According to Dr. Kim Soh Yeong from the
Korea Labor Institute (KLI), it was only after the
International Labor Organization (ILO) pressured the ROK to
address the disparity between regular and non-regular workers
that the new bills were proposed. Kim also suggested that a
fear of Korean enterprises moving to other Asian markets
where labor costs are lower was also a factor for the ROKG in
considering the labor reforms.

POTENTIAL PITFALLS
------------------

4. (SBU) Contrary to the notion of stabilizing the workforce
in Korea through these bills, many employers are fearful that
their labor costs will rise as they will now be obligated to
provide equal wages and equal benefits for all types of
workers. Additionally, employers must now convert
non-regular workers to regular status upon completion of a
two-year contract or face fines up to $30,000. With the
two-year mark looming over an employer's head, opponents to
the bills fear that workers will be terminated just before
the two-year point so that employers can avoid taking the
worker on as a regular employee. National Assembly
Representative Bae Il-do, a member of the Environment and
Labor Committee, voiced this same concern about employee
terminations but added that it was better to pass these bills
now than continue to allow the discrimination of non-regular
workers. Although workers had high expectations for support
from the new law, the bills fall short on both wages and job
security, Bae said. NOTE: Bae has the unique perspective of
being a former labor union founder and president who has
since left organized labor to join the National Assembly.
END NOTE.

UNION PERSPECTIVES
------------------

5. (SBU) The largest trade union umbrella organization, the
Federation of Korean Trade Unions (FKTU) was openly
supportive of the bills and helped the government rationalize
the approval of less potent bills that could be delivered to
the workers now rather than further delaying the debate. The
main opponents to the bills are the Democratic Labor Party
(DLP) and the Korean Confederation of Trade Unions (KCTU),
the second largest trade union umbrella organization. These
two groups share the concern that the bills have opened the
door for employers to hire even more non-regular workers to
replace employees on leave due to childbirth or illness.
They unsuccessfully lobbied the government to add language
that would have limited the sectors in which non-regular
workers could be employed. NOTE: The day after the bills
were passed, KCTU organized a large protest on the grounds of
the National Assembly to show their displeasure with the
laws. Reports said that approximately 3,000 protestors
attempted to enter
the grounds of the National Assembly but were repelled by
riot police using water cannons. END NOTE.

COMMENT
-------

6. (SBU) The passage of the bills presents a new challenge
for Korea's workforce. Regular workers, backed by their
unions, will not accept a decrease in wages as employers
attempt to cut costs while equalizing wages between regular
and non-regular workers. Non-regular workers, buoyed by the
passage of the new laws, must be careful not to demand too
much in order to avoid putting their employers in a situation
where the prospect of sharply rising staffing costs forces
them to make reductions. On a positive note, the consensus
on the bills represented a rare meeting of the minds between
the ruling Uri and opposition GNP parties although
legislators have not disclosed their motives for the sudden
willingness to cooperate. With the current legislative
session winding down and a number of important budget and
policy issues still pending, politicians on both sides may be
doing some "give and take" in order to realize some
late-session progress on these fronts.
VERSHBOW

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