By Yoon Ja-young



Cheong Wa Dae and the business community are demanding passage of pending labor reform bills in parliament, stressing that a more flexible labor market is essential to promote economic growth and job creation.



At the ministerial meeting Tuesday, President Park Geun-hye said passage of the labor reform bills is crucial to solve the youth unemployment problem.



The governing Saenuri Party and opposition parties have been clashing over the five labor reform bills, which include revising labor standards, employment insurance and industrial accident insurance, as well as easing regulations on non-regular workers and dispatched workers.



The most controversial among them are the bills on non-regular and dispatched workers. While full-time regular workers have been the typical form of employment in the country, the ratio of non-regular workers and dispatched workers increased following the Asian financial crisis in 1997, as businesses sought flexibility in labor.



Currently, fixed-term contracts should be converted to permanent contracts after two years if the company wants to hold onto a non-permanent worker. The reform bill proposed by the governing Saenuri Party, meanwhile, allows extending the fixed-term contract for two more years to four.



It says that the extension will provide more stable employment for non-regular workers. The opposition parties, however, say it will only increase the number of non-regular jobs as they won't be promoted to regular positions after two years.



The business sector says that the reform will benefit non-regular workers as well as businesses. "Previously, businesses could use non-regular workers for many years," said a spokesperson for Korea Employers Federation. "The workers could build up expertise. Due to the two-year limitation, however, businesses terminate the contract unless the worker provides very high quality labor. Fixed-term workers don't like the two-year limitation either as they prefer renewing contracts and continuing with their jobs."



Currently, the government also restricts the use of dispatched workers. While businesses can use dispatched workers for simple support jobs in offices, they can't use them for manufacturing jobs.



"Manufacturing powerhouses such as Germany and Japan also allow dispatched workers for manufacturing sites because businesses can cut costs," the spokesman added. "Workers who are not qualified enough for regular jobs can also make use of the opportunity to work at large companies. There is demand, but there has been a barrier. Businesses will continue using regular workers for jobs that require expertise. They want more flexibility."



Byun Yang-gyu, a research fellow at the Korea Economic Research Institute, said flexibility in the labor market leads to higher economic participation and employment rates.



He cited Japan's labor market reforms as an example. Japan has been easing regulations on fixed-term workers and dispatched workers since 2003, while improving their working conditions.



It banned discriminating against fixed-term workers versus permanent contract workers in terms of compensation. "While the number of the employed decreased, the number of fixed-term workers increased," he said. "The fixed-term employment system enabled Japan to decrease fluctuation while achieving stable employment."



He added that Japan created 1.37 million dispatched jobs by allowing such positions in the manufacturing sector. "Most of them were newly created jobs, rather than substituting for regular jobs," he said.



