More than 2
million in S. Korea living as subcontractor workers |
Posted on : Sep.29,2014 16:48 KST
Lee Jeong-hoon, a
dispatch TV and internet installation technician for LG Plus, works on
telephone pole in Seoul’s Geumcheon district, Sept. 4. (by Park Jong-shik, staff
photographer)
Forms of indirect employment spread broadly from manufacturing to many
areas of the economy By Jeon
Jong-hwi, staff reporter The issue of
indirect employment is drawing renewed attention in the wake of recent court
rulings recognizing 1,647 in-house subcontractor employees at Hyundai and Kia
Motors as indirectly employed by the automakers. Indirect
employment in South Korea is not a 21st century invention. Industries like
construction, shipbuilding, and steelmaking have made use of in-house
subcontractors since the 1960s and 1970s, bringing employees of those
businesses to perform jobs at the contracting workplace. Outsourcing of
cleaning and security jobs has also been a common practice. It was in the early
1990s that in-house subcontractors first began appearing directly on automobile
production lines. The Asian
Financial Crisis of 1997 was the event that truly ushered in the country’s
irregular employment boom. At the International Monetary Fund’s request,
systems for introducing layoffs were introduced into the Labor Standards Act,
and the newly enacted the Act on the Protection, Etc., of Dispatched Workers
allowed employers to send their workers to other workplaces to serve under
other hirers. Job security for workers has been desperately fragile ever since. First bit of momentum: Asian Financial Crisis Faced with heavy
worker resistance to large-scale “voluntary resignations” at the time,
companies turned away from regular employment and began hiring on one- to
two-year contracts - or simply outsourcing the duties to partner businesses.
The practice soon spread like a contagion: duties like parking lot attending,
security, promotions, facilities management, and cash register operation were
swiftly outsourced at financial firms, hospitals, hotels, and retailers. “In-house
subcontracting is a premodern practice, but it was already in wide use in the
past,” said Lee Byung-hee, a senior fellow at the Korea Labor Institute. “After
the Asian Financial Crisis, it became the standard model for big companies.” Lee also
suggested the scope of the phenomenon may be unique to South Korea. “You don‘t find
any examples overseas of in-house contractors not just being used for simple
duties like cleaning and security, but being widely put to work on permanent
duties in areas like manufacturing and the public sector, sometimes doing the
same things the regular workers do,” he explained. As was confirmed
in the court’s decision about the employment status of workers at Hyundai
Motora and Kia Motor, in-house subcontract work in the manufacturing industry
is at the heart of the problem of indirect employment. This kind of work has
fueled the controversy about illegal dispatching for more than 10 years. Beginning at air
conditioning manufacturer Carrier in 2001 and continuing at Hyundai Motor,
Kumho Tires, Hyundai Heavy Industries, Kiryung Electronics, and other
manufacturers, in-house subcontract workers have been carrying on their
struggle for the prime contractor to take responsibility for their employment.
Since they work not at the company that employed them but rather at the prime
contractor, by necessity they are overseen and managed by the prime contractor. The Labor
Standards Act states that “no one shall intervene in the employment of other
person for the purpose making a profit or gain benefit, as an intermediary,
unless otherwise prescribed by any Act,” and the only act that legalizes this
is the Act on the Protection Etc. of Temporary Agency Workers. In-house
subcontracting does not even have the legal grounds demanded by the Labor
Standards Act, and it is stoking the flames of social conflict between
employers and employees. Despite this, the government and the National Assembly
are not working actively to resolve this contradiction. South Korean
society completely recovered from the Asian financial crisis in 2003 and 2004,
at the beginning of the administration of Roh Moo-hyun, but it failed to
resolve labor problems created by the IMF such as the Act on the Protection,
Etc., of Temporary Agency Workers. “It was a time
when we were breaking free from the economic crisis and capital was being
accumulated. The debt ratio at the chaebol had dropped to 100%, and their cash
reserves had reached an all-time high. That was the time we should have
addressed the issue of irregular workers, but we missed our chance,” said Cho
Don-mun, professor at the Catholic University of Korea. Act to decrease number of irregular workers has adverse effect A more direct
cause of the expansion of indirect employment was the enactment of the
so-called irregular worker laws in July 2007. The Act on the Protection Etc. of
Fixed-Term and Part-Time Employees was passed and the Act on the Protection
Etc. of Temporary Agency Workers was revised, placing a two-year limit on the
employment of fixed-term and dispatch workers. The object of these laws was to
put the brakes on companies that were in the habit of using irregular workers
without any restrictions. It is difficult
to calculate how many people are indirectly employed, since the government does
not keep any official statistics. Nevertheless, Kim Yoo-seon, senior researcher
at the Korea Labor and Society Institute, estimates that the number of dispatch
and temp workers jumped from 449,000 in 2001 to 767,000 in 2007. These figures
do not even include a considerable number of in-house subcontractor workers. The object of
the law was to increase the number of regular workers, but companies dodged the
regulations of the labor law by taking refuge in the even worse practice of
in-house subcontract work. “As companies
attempted to avoid the regulations of the irregular worker laws, they found
that temporary agencies and subcontracting companies were too bothersome, so
they started hiring workers as independent contractors. In the past, the
technicians who install water heaters had been directly hired by companies on a
temporary or daily basis, but the companies converted this to a sneaky form of
special employment in which independent contractors signed a personal contract
with the prime contractor,” said Kim Jong-jin, head of research at the Korea
Labor and Society Institute. Without anything
to stop them, South Korean companies have continued to increase their use of
indirect employment, and today there are more than 2 million such workers in
Korea, most labor activists believe. Indirect employment was once centered in
the manufacturing industry, but it has now spread into the service industry. In
2013, employees of electronics and cable subcontractors for chaebol such as
Samsung Electronics Service, C&M, and T-Broad organized unions and carried
out multiple strikes and sit-ins calling for job security, higher wages, and
acknowledgment that they are employed by the prime contractor. The Ministry of
Employment and Labor has been inspecting the subcontract companies for LG Uplus
and SK Broadband since April to determine the employment status of the workers.
The ministry will announce its findings on Sept. 29. “We ought to
have placed limits on the reasons for hiring irregular workers when we revised
the law in 2006. When we limited the period of employment, companies didn’t
regularize these workers, they converted them to indirect employees. What we
should do now is make the regulations even tougher. We should make it a rule
that anyone who works more than one year should be viewed as a permanent,
regular worker. We should also make the reasons for hiring irregular workers
indirectly even stricter than those for hiring irregular workers directly,”
said Cho Don-mun. Please direct
questions or comments to [english@hani.co.kr]