Korean Finance & Service Workers' Union yields to part-timers

The Korean Finance & Service Workers' Union decided to effectively freeze wages of full-time workers so that part-timers can be shifted to full-timers. It is the first time for an industry-specific union to put better treatments for part-timers ahead of the established rights of full-time workers. The organization consists of non-monetary institutions’ unions such as insurance and securities companies. The recent meeting of the union members called for more than a 4.4 percent income increase that is added up with the economic growth rate of 2.7 percent and the inflation rate of 1.7 percent during this year’s income negotiations. It decided that the union would only demand an income increase of 1.7 percent or so – the inflation rate – in the event that companies take actions for the shift of part-time to full-time workers.

The decision of the union has brought attention to a possibility that it will go beyond representing full-time workers’ interests to being responsible for helping resolve social issues. The union agreed to demand an increase of base pay be more than 10.9 percent – this year’s minimum wage rise rate – or a monthly amount of 172,000 won or higher, instead of arguing for full-time workers’ income rises. The cost of shifting part-time to full-time workers and insourcing business units would be offset by a freeze on the existing full-timers’ wages, the union said.

The dually divided structure of full- and part- timers as well as large and small companies is a key factor in causing severe youth unemployment and income inequalities. As of last year, the average monthly income of part-time workers is only about 54.6 percent of full-timers,’ while workers at SMEs get paid 45.7 percent less than their counterparts at large companies.

Concessions are to be made by full-time workers to mitigate the divides in the labor market. An ever-increasing number of part-timers imply high levels of job security and social protection for full-timers. Given that trade to gross national income is 84 percent, Korea is highly dependent on trade, which makes it hard to raise incomes unconditionally to maintain its competitiveness edge in the global market. That is why cooperation between labor unions matters just as that between labor and management. The recent concessions by the Korean Finance & Service Workers' Union is hoped to have a ripple effect into labor unions of the country's large companies and help address youth unemployment.