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The Peninsula

Perennial Struggle Between Labor Rights and Economic Growth

Published July 23, 2020

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

What Happened

  • A recent report from the Korea Development Institute reiterated that the South Korean economy remains under severe strain due to the reduction in global trade.
  • However, the report also noted that consumer spending increased 1.7% in May after a 2.2% reduction in April. This creates greater expectation for domestic consumption to drive the economic recovery from the pandemic-induced economic hurdle.
  • A delivery worker recently died of over-work, leading to criticisms that insufficient protections are in place for workers in the service industry.

Implications: The Korean government is struggling to balance the public’s demand to better protect service industry workers while simultaneously helping the domestic retail industry lead the economic recovery. With consumption in the domestic service industry providing one of the few bright spots in the economy, policymakers maybe wary of regulating employers in this sector. Meanwhile, the government’s failure to extend protections will erode public support for the administration which had promised to build a more equitable society.

Context: Already, workers with part-time contracts were losing jobs at a rate 70 times greater than that of workers in full-time positions. In this environment, policymakers fear that introducing measures to protect workers in the service sector would lead to higher unemployment. To break the binary choice of protecting workers or sustaining economic activity, the government has proposed extending unemployment insurance to all economically-active citizens. The hope is that this will lead to better treatment of the workforce by reducing the employee’s dependence on bad employers.

Korea View was edited by Yong Kwon with the help of James Constant and Sonia Kim.

Picture from flickr user Arnaud Matar

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