More than half of foreign investment companies that invested in Korea assessed the labor-management relationship in Korea as confrontational.
The Federation of Korean Industries (FKI) revealed on the 27th that, based on a survey conducted by Monoresearch targeting 439 foreign investment companies with more than 100 employees, the rate of respondents acknowledging the labor-management relationship in Korea as confrontational was 57.0%. Of these, 5.0% responded that it was very confrontational, while 52.0% said it was confrontational.
The percentage of respondents who considered the labor-management relationship as cooperative was only 7.0%.
Research results also showed that the level of labor-management cooperation in Korea is lower than that in the United States, Germany, and Japan. When considering Korea's level of labor-management cooperation as 100, the United States scored 122.0, Germany 120.8, and Japan 115.0. China scored 83.8.
Regarding the rigidity of the labor market in Korea, 64.0% responded that it was rigid, overwhelmingly higher than the 2.0% that considered it flexible. If the level of labor regulation in Korea is set at 100, the United States has a score of 87.4, Germany 90.8, Japan 95.2, and China 111.2. This indicates that the intensity of labor regulations in Korea is stricter than that in the United States, Germany, and Japan.
Eighty-one percent of foreign investment companies evaluated the labor-management relationship and labor regulations, among other aspects of the Korean labor market environment, as important factors when establishing medium- to long-term business plans. The percentage that indicated they had considered withdrawing or scaling down operations due to Korea's labor and industrial safety regulations was 13.0%. The FKI noted, "Excessive labor regulations can act as an obstacle to attracting foreign investment."
Foreign investment companies identified political strikes related to higher labor organizations (35.0%) as the most significant union practice that needs improvement. When combined with strike behaviors like sit-ins at business sites (26.0%), the total responses related to strike activities reached 61%.
Among the management difficulties related to labor issues, the most cited were challenges in employment adjustments such as layoffs or redeployment (34.0%), inflexible working time systems like the 52-hour workweek (22.0%), and rigid wage systems such as minimum wage or seniority-based salaries (12.0%).
Lee Sang-ho, head of the Economic and Industrial Division of the FKI, said, "The confrontational labor-management relationship and rigid labor market regulations in Korea are significant burdens on foreign investment companies' personnel management, and these factors are major reasons for the decline in Korea's investment attractiveness."