Balance needed for labor pact

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Balance needed for labor pact

Published: 20 Mar. 2026, 00:00

Audio report: written by reporters, read by AI

President Lee Jae Myung, second from left, listens to remarks by Kim Dong-myeong, the head of the Federation of Korean Trade Unions, left, during a labor policy forum at the presidential office in Seoul on March 19 to mark the launch of the first Economic, Social and Labor Council. Next to Lee are Sohn Kyung-shik, the chairman of the Korea Employers Federation, third from right, and Kim Ji-hyung, the head of the council. [YONHAP]

President Lee Jae Myung called for a broad social compromise among labor, business and government on Thursday. Speaking at a labor policy forum marking the launch of the first Economic, Social and Labor Council, Lee said that for workers, “dismissal is equivalent to death,” and stressed the importance of creating conditions in which workers can accept greater employment flexibility.

Lee proposed strengthening the social safety net as a solution and urged stakeholders to pursue a long-term agreement. He suggested that companies benefiting from greater flexibility should bear more of the costs of expanding social protections. His approach resembles the Danish model of “flexicurity,” a portmanteau of “flexibility” and “security,” which combines flexible hiring and firing practices with robust unemployment benefits and active labor market policies.

In Denmark, such a system has been sustained through high unionization rates, generous unemployment support and extensive job retraining programs. By contrast, Korea’s labor market remains structurally divided, raising questions about whether a similar model can be successfully implemented.

While concerns from labor groups about job security should not be dismissed, the claim that dismissal is tantamount to death also reflects the extent of protection for certain portions of the work force.

In a more balanced labor market, workers whose wages align with productivity would be able to transition more easily to new jobs. Instead, a dual structure has taken hold. Workers in large corporations and regular positions, often backed by strong unions, tend to receive wages that exceed their productivity, while those in small- and medium-sized enterprises or nonregular roles face more precarious conditions. According to Lee Jeong-min, an economics professor at Seoul National University, unionized regular workers in large firms have job tenures 4.8 times longer and wages 2.4 times higher than their counterparts at smaller firms without unions.

Opportunities for new entrants remain limited. Only about 2 percent of new hires are in large firms with regular positions, effectively restricting access to desirable jobs for younger workers. This imbalance has contributed to rising youth unemployment, which reached 7.7 percent in February, the highest level in five years.

For a meaningful compromise, trust between labor and management and balanced government policies are essential. However, recent measures, including the implementation of the “Yellow Envelope” law, discussions on extending the retirement age and proposals to shorten working hours, have drawn criticism for placing additional burdens on businesses.

The government should move quickly to address uncertainties in the industrial sector, beginning with supplementary measures to refine the Yellow Envelope law. Without such adjustments, efforts to achieve a durable social agreement may face significant challenges.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.