`Labor Rigidity Driving Away Foreign Investment`

“Under Korean law, we have to fire our part-timers or give them permanent jobs after two years of employment. It’s one of the most illuminating examples showing how rigid labor law is here,” said Mitsubishi Korea CEO Tsuneo Iyobe.

Iyobe told the Dong-A Ilbo in an interview Friday about factors driving away foreign investors from Korea. He is also the chairman of the Seoul Japan Club, a group comprising Japanese business leaders in Korea.

“We run business on the principle of efficiency, and have to think about labor costs and human resource flexibility,” he said. “Forced to choose between firing and permanent employment, we cannot help but fire them. Corporations should be able to hire and fire part-timers at their discretion and in close consultation with unions.”

Iyobe also blamed the rule on mandatory union consent if employment terms change, saying this is disadvantageous to workers and an anti-global standard. Advanced countries like Japan allow companies to change terms without consent. In this respect, Korea lies outside the global mainstream.

“If laws reduce labor flexibility, fewer corporations will wish to invest,” he said. “On the surface, the laws favor laborers, but in substance, the workers will ultimately take the heat and disadvantage.”

The Japanese executive also complained about the inconvenient living environment for foreign nationals in Korea, like the problems with foreigner registration numbers. He said the numbers are useless in things like information access or online shopping.

Despite all of his gripes, Iyobe expressed high expectations for the incoming Lee Myung-bak administration.

“The economic advancement of a country eventually depends on how much investment companies make,” Iyobe said. “I expect the business-friendly policies of Mr. Lee will upgrade Korea’s economy.”

Iyobe also spoke on stagnant free trade talks between Seoul and Tokyo.

“Political issues have hampered free trade negotiations between Korea and Japan,” he said. “We hope that the pragmatic administration of Mr. Lee will work out a successful FTA with Japan.”

changkim@donga.com