Future Issues of Indefinite Employment Reclassification Rule － Learning from the Precedent in South Korea － | ニッセイ基礎研究所
Future Issues of Indefinite Employment Reclassification Rule － Learning from the Precedent in South Korea －
生活研究部 主任研究員・ヘルスケアリサーチセンター・ジェロントロジー推進室兼任 金 明中
(1) South Korean government enforced Act on Protection of Non-regular employee
Increase in the number of non-regular employee began with IMF economic crisis. As terms of financing by IMF, the government had to be commited to structural reform of company, money and banking, public sector and labor market. Especially introduction of dismissal of the purposes of reorganization system and legislation of “Act on Prohibition against employee dispatch” are required for labor market.
However, there was a limitation in fulfilling IMF’s request amid growing social fear such as business bankruptcy and unemployment. Although labor law including legislation of dismissal for the purposes of reorganization system revised in 1997, the timing of enforcement was postponed for two years later because of opposition by labor side.
To get agreement of workers, government, employers, South Korean government set up “the Tripartite Commission” which involves labor union, representative of business managers and government delegate in 1998 and issued “Social agreement for economic crisis breaching”. Although it suggested 90 items for early enforcement of dismissal for the purposes of reorganization system and legalization of dispatched work, and 21 agendas for second consultation, it just ended without any agreement.
Under these conditions, the timing of dismissal for the purposes of reorganization system was postponed and “Social agreement for economic crisis breaching” have not been concluded, IMF economic crisis urges the company adjust employment which increase the rate of non-regular employee. Since IMF economic crisis, it got difficult than ever before to controlling company for government, and it is said that it affected to increase non-regular employment and restructuring of company.
Amid the ongoing increasing in no-regular employee, South Korean government are trying to alleviate instability of employment and polarization in labor market because of non -regular employee rising by establishing Act on Protection of Non-regular employee such as “Act on temporary and daily workers”, “Act on Prohibition against employee dispatch” to normalize non-regulate employee to regulate employee. The Act aims to restrict employment period of short-time and contingent workers, to curtail abuse of non-regular employment and to correct irrational discrimination against non-regular employee by admitting to diversification of employment. Then, when non-regular workers work more than two years, they came to be regarded as open-ended contracted employee.
It was about 2004 that South Korean government undertook to establish Act on Protection of Non-regular employee. However, labor side strongly opposed to it because the Act would only increase dispatched employee and would not resolve the issue of discrimination. As a result, two years had passed since the bill had been submitted to the Diet, and the ruling and opposite parties finally came to an agreement in 2006 which is the fourth year of No Mu-Hyeon administration. In this way, Act on Protection of Non-regular employee passed the Diet’s full House in November 30th in 2006 and was enforced in July 2007.
The period which makes direct employee mandatory was shorten from three years to two years after the agreement. As the scope of the Act in the early stages, only a workplace and public institution which usually hires more than 300 employees. The scope was extended generally, and it included company which usually hires between 100 and 300 employees in 1th July 2008, and finally it does all company and a workplace with more than 5 employees in 1th June 2009.
Then, how the enforcement of Act Protection of Non-regular employee changed the situation? Initially, the rate of non-regular employee which was 37.0% in August 2004, decreased to 35.8% immediately after the enforcement in August 2007. However, we can’t say for sure that the establishment definitely reduced the rate because the trend of the number of non-regular employee had tended to decease since August 2004. The rate of non-regular employee continually had been decreasing since August 2007 as well and it reached 31.9% which is the lowest since the survey had begun seriously in 2004. After all, it increased to 32.9% in August 2017 which is higher standard for the first time since August 2012 of 33.2% (Figure 4).
Meanwhile, the rate differs by ages among 30-39 years old, 40-49 years old and 15-19 years old, and it is also considered statistically meaningful as well ( the result which doesn’t hypothesis variance because there was no homoscedasticity according to Levine's test for equality of variance).
・Where completion of a job or a time period necessary for completing a job has been established.
・Where a position becomes vacant due to absence or reassignment and someone must perform those job duties in the absent worker’s place until the absent worker returns in the corresponding year.
・Where a worker must complete worker study or training and the time period necessary to complete it has been established.
・Where an employment contract has been executed with a senior citizen as defined in Section 2.1 of the “Senior Citizen Employment Promotion Act.”
・Where utilization of specialized knowledge and skills is required as established in a presidential executive order in connection with a job sponsored by a government welfare or unemployment measure.
・For any other reasonable reason as established by presidential executive order.
In 2013, the South Korean Ministry of Labor announced the results of the Labor Mobility Panel Survey by Mode of Employment (1 – 8) in order to evaluate the effectiveness of the Act on the Protection of Non-Regular Workers, implemented on July 1, 2007. This survey polled a sample of 20,000 fixed-term workers, conducting its first survey in April 2010 and its eighth and final survey in April of 2012, observing changes in labor mobility, labor conditions and worker satisfaction during a period of two years.
According to the report released by the Ministry of Labor, as of April 2012, with regard to 1.215 million fixed-term employees subject to the Act on the Protection of Non-Regular Workers, 575,000 (47.3％) were still working at the same job, and 640,000 (52.7％) had left the job. Among 640,000 who left the job, the largest category, of 440,000 left for a different job (69.4％), 82,000 became unemployed (12.8％) and 114,000 (17.9％) had left the work force(Figure7). Looking at the reasons why people had left their job, 392,000 (61.3％) had left voluntarily, exceeding the 248,000 (38.7％) who had left involuntarily.
The 1.215 million temporary workers (① fixed-term) subject to the Act on the Protection of Non-Regular Workers, 71,000 had become regular full-time employees at the same workplace, and 68,000 had become regular full-time employees at a different workplace, for a total of 139,000 (11.4% of fixed-term workers) becoming reclassified as regular employees. Combined with the 424,000 workers who were reclassified as contractual employees for an indefinite contractual period under the Act on the Protection of Non-Regular Workers by working at the same workplace as fixed-term workers for over two years, this amounts to 563,000 workers whose employment status was protected by the Act on the Protection of Non-Regular Workers, or 46.4% of all fixed-term workers.
Examining the ratio of fixed-term workers reclassified as regular employees by business size, 20.2% were at business with over 100 employees (hereinafter “100 or more-person businesses”), twice as many as the 10.1% at businesses with fewer than 100 employees (hereinafter “under 100-person businesses”). On the other hand, the ratio of those classified as contractual employees for an indefinite contractual period was 75% at under 100-person businesses, higher than the 69.6% at 100 or more-person businesses.