KDI - Korea Development Institute - RESEARCH - Research Areas

Summary

Research Monograph KOR An Economic Analysis of Platform Labor: Focusing on Monopsony Power and Social Protection

We study platform labor from the perspective of labor monopsony. We start from exploring the size and trend of the domestic platform labor market and the current status of social protection available to platform workers. Extending the often-discussed nature of platform work, we shift our attention to the defining characteristics of digital platforms and the link between product and labor market competitions, focusing on labor supply elasticity with respect to wage and monopsony power. We conduct empirical studies in two distinct areas: the IT freelance market and the food delivery app market. In the context of the IT freelance market, we estimate the elasticity of labor supply by analyzing data collected from a Korean IT freelance platform via web-scrapping. The findings show that the monopsony power of the freelance platform is relatively minimal, suggesting a positive effect of the platform in fostering thicker markets. In contrast, for the food delivery app market which expanded rapidly during the COVID-19 period, a survey of riders unveils certain limitations related to multi-homing and platform switching, thereby signifying a potential for monopsony power in this sector. Extended analyses using app-use data combined with large-scale labor surveys show a downward wage trend with an increase in market concentration―despite stable or even growing employment levels. This pattern contradicts the traditional expectations under labor monopsony, which usually involves negative impacts on both employment and wages. Instead, our findings suggest an asymmetry in bargaining power. We conclude with overarching implications on competition and labor policies, focusing on platform’s monopsony power.

Summary

Research Monograph KOR A Study on the Economic Effects of Labor Unions and Who Represent Employees

This study analyzes the economic effects of labor unions on employment, wage and the composition of employees, and attempts to answer the question of who should represent employees regardless of the presence or absence of unions.

It was not until July 2011 that Korea fully initiated the multiple labor union system. The history itself of labor union has been quite long in Korea, but labor union’s role has been studied mostly focusing on the labor-management relations. The wage effect has been one of few themes analyzed from an economic approach. In Korea’s legislative system, the collective agreement has normative superiority, and employment contract or rules are subordinate to the agreement. This naturally lets the labor union act as the most powerful decision maker. However, the reality that the unionization rate is merely 10% raises the fundamental question of whether it is justifiable for unions to make decisions as representatives of entire employees. Even the current Tripartite Commission of Labor, Manage- ment and Government has been blamed for mainly representing larger enterprises and their employees instead of all parts, which lead the representativeness of the commission in doubt.

This interdisciplinary study was conducted by experts in economics, business management and law. Those from business management analyzed changes in labor unions and labor-management relations and the effect of the human resource management as a substitute for labor unions for the period since the 2000s. The economists analyzed the effects of labor unions on the establishment’s employment size, wage, productivity, the number of employees and the proportions of non-regular employees and directly- and indirectly-hired non- regular employees. Lastly, the legal experts focused on what are needed and who should be the representative to best represent employees as a collective group.

Main findings of this study are as follows.
First, labor union’s influential power has remained in effect in the 2000s, but the characteristics of conflictive relation between labor and management has weakened and labor unions appear to be increasingly moderate. Furthermore, with the adoption of the law in July 2011 that allows multiple labor unions at a single workplace, such tendency is very likely to be reinforced further.

Second, in the sense that the human resource management is not used to substitute labor union in the workplace without labor union, Korea can be seen to be more similar to the UK than to the US. However, like the US, the human resource management in Korea is found to reduce the unionization rate within the existing labor union or to improve the labor-management relations that have been regarded as an antecedent factor to the substitution of a labor union.

Third, the analysis of labor union’s economic effects confirms that Korea’s labor unions in the mining and manufacturing industry have caused no significant influence on small-sized establishments with less than 30 employees in the aspects of employment size, wage and productivity, but the influence on those with 30 or more employees turned out differently depending on which indicators are analyzed. For medium-sized establishments with 100 or more employees, the presence of labor union raises the average wage by a minimum of 2.1% and a maximum of 12.1%. In the meantime, this study found it difficult to present accurate answers to the question regarding the effects of labor unions on employment size and productivity in these establishments. Limited data available probably caused the inconsistency in estimations. Further studies are required with more complete data.

Lastly, as a method to collectively represent employees, this study suggests the committee of employees that only consists of employees, instead of labor-management council which is a joint consultative committee between labor and management. This is because under the current system, the representativeness of labor representative or labor-management council is under question, hence there is no guarantee of collective laissez faire in the labor-management relations. In this case, the authority of the employees’ committee must be constructed within the scope that does not infringe the three primary rights of labor unions, and the committee’s legitimacy can be achieved only through democratic election, which must be fully reflected in the legislation.

Summary

Policy Study Reforming Labor Management Relations : Lessons from the Korean Experience : 1996-97

This book critically examines the detail development of labor
management relations reform in Korea which occurred during 1996 to
1997. It analyses such issues as why Korea launched labor
management relations reform. What were the goals and objectives of
the reform? How has it been initiated and implemented? What have
been the major difficulties and obstacles and how has the reform
leadership managed those adversities?

In addition, the book evaluates the reform process from the
perspective of effective reform management. How good has the
reform managed? Has it been successful? If yes, how come?, if not,
why not? What lessons can we draw from Korean experience? The
author strongly believes that the Korean lessons can help in
developing better strategies for successful reform both for the future
Korea and for other developing nations.

There have been many discussions and studies on what to reform in
the developing nations, but very little studies on how to reform them
successfully. In many cases, we know our goals but we do not know
how to get there. We know what we have to do, but do not know
how we can do it successfully. I am sure that this book will be an
invaluable asset both for academics as well as practitioners.

Summary

Working Paper Determinants of Union Entrance and Relative Wage Effect of Unions in Korea

The purpose of this paper is two-fold. First, it attempts to
estimate the relative wage effect of labor unions in Korea and
second, to analyze the determinants in the decision to join a
union. Through use of the two-step estimation method to adjust
the sample selection bias, the relative wage effect of labor
unions is attained. Using this result, determinants of a worker`s
decision to join a union is estimated for the male production
workers in Korea. After eliminating the sample selection bias,
we estimated that the relative wage effect of labor unions in
Korea to be 2.1%. As for the determinants of a worker`s
decision to join a union, rather than such weak wage effect, the
worker`s decision to join a union, rather than such weak wage
effect, the worker`s socio-economic status plays a greater role.

Summary

Working Paper Labor Market Developments and Reforms in Korea

This paper attempts to document the structural changes in
the Korean labor market in the 1980s and the 1990s with
special emphasis on the changes around 1987. We have
investigated the possibility and extent that the increased labor
union activity has affected real wages and various premiums.
We have also investigated whether labor market flexibility has
decreased in the 1980s and 1990s and have considered the
sources of new rigidity in the market. Finally, we will discuss
labor market regulation and reform in Korea. We have
evaluated the labor market outcomes of 1987 reform and will
discuss on 1997 reform.

(※서문에서 발췌한 내용임)

Summary

Other Research LABOR RELATIONS AND INDUSTRIAL POLICY : The Japanese Case

The purpose of this study is to investigate the management pattern of Japanese-Korean policy operating on network organizations and to draw possible lessons from them or thereon. To Secure the continuous stabiblity of an economy, the establishment of stable labor-management as an absolute pre-reguisite. The Center for Economic Education(CEE) believes the publication of this report will contribute toworld further researches to provide desirable labor-managementrelations.

Summary

Other Research Emerging Labor Issues in Developing Asia (December 7-8, 1989)

This survey of labor market conditions in several developing
economies in Asia has revealed that the problems are varied and
complex. In many of these economies, market forces by and
large have determined wages. In others, however, institutional
forces have played a crucial role in wage determination. What
differentiates these Asian nations from the lagging developing
countries of the world is that their institutional forces did not
lead to wage increases in excess of productivity gains and thus
did not become a drag on economic growth. There are now,
however, signs that new institutional forces more redistributive
government policies and more strident unionism are developing
in some of the NIEs. If these forces do become entrenched in
these economies, the continued dynamism of these economies
into the 1990s may be in jeopardy.

The high includence of labor strife in Korea, for instance,
may not simply be an attempt to increase the material
well-being of the working class, but may reflect a sense of
discontent with the distribution of income and wealth that the
become less equitable in recent years. It may be widely
perceived that the growth-oriented policies of the 1960s and
1970s unjustly allowed vast fortunes to be accumulated by a few
at the expense of many. Such perception, whether correct or not,
will not easily go away with settlements on wages and working
conditions that are in step with productivity gains.

The situations in Taiwan and Singapore are somewhat
different from the gloomy picture of Korea. In Taiwan, however,
there are latent conflicts between the original Taiwanese people
and the mainland China transplants who have ruled the country
so far. These conflicts may turn into open confrontations and
undermine the stability of Taiwan's industrial relations.
Moreover, Taiwan has yet to privatize its large state-owned
enterprises; when it does, its private sector will resemble that of
Korea with its attendant problems.

Singapore has yet to prove how it can make the eventual
transition in its political leadership. Under different political
leadership, the government may not be able to maintain the
peaceful partnership it has thus far had between labor unions
and management.

The Philippines can learn form the experiences of Korea and
Taiwan. It should let the market do more to determine wages,
and it should encourage the development of small and
medium-sized enterprises, if only by avoiding policies that are
biased in favor of large scale conglomerates. At the same time,
it is recognized that replacing existing institutions with more
market forces in the labor market is a difficult task.

As for the Asian NIEs, their lessons will have to come form
the industrialized countries. As they approach industrial
maturation, they too will have to accept changes in their labor
markets and industrial relations, For political as well as for
economic reasons. the labor markets of the Asian NIEs will not
continue to function as if they are a competitive market, if they
ever were. Thus, the challenge these economies now face is to
develop labor market institutions which do not become a drag on
economic growth. The challenge is to find the institutions which
help bring about a fair and just income distribution and are
consistent with more open political processes, but at the same
time do not become a drag on economic efficiency and
productivity gains. Being late-comers in industrialization, they
should be able to learn from the experiences of those who have
preceded them.

Summary

Working Paper Labor Rights and International Trade : A Developing-Country View

The notion of incorporating labor rights in trade policy is, to
the eyes of the developing countries, a revival of the old pauper
labor argument. Low wages of the developing country is a
source of comparative advantage and cannot be a ground for
unfair trade practice. Intensifies efforts for trade/worker rights
linkage will undermine not only the export capabilities of the
NICs but also the trade and growth prospects for the late
coming LDCs. It is free trade through which workers in
developing countries as well as developed countries can benefit.

In terms of implementation of the labor rights clause within
the trade policy, as is laid out in the GSP, feasibility of
maintaining fairness would be very difficult because of the
problems related to its definitions and possibilities of
arbitrariness in its application, Effort sto improve labor standards
of the workers world-wide on international level could be made
by the ILD and its International Labor Code through pressures
and technical guidance.

Asian NICs including Korea have performed successfully in
expanding employment and raising the living standards of
workers in their development process. Behind this performance is
the fact that their labor market policy has been maintained
flexible abiding excessive institutional interventions. Appropriate
labor market policies for developing countries burdened with
economic growth and employment generation should be carefully
sought after to balance the long term growth objectives and the
demands of the workers.

Summary

Working Paper Labor Rights and Working Conditions in Korea

In this report, arguments were made against the charges on
labor rights and working conditions of Korean wage earners.
The legal framework of the industrial relations system and trade
union movement in Korea was reviewed. Changes in labor
conditions in Korea were also examined to see how the general
well-being of workers has been improved over the years during
the nation`s rapid economic development.

It should be noted as one of the concluding remarks that
the legal framework of Korea`s industrial relation system does
provide workers with basic labor rights and that the trade union
movement has expanded over the years and become more and
more influential in improving the general welfare of the workers.
It should also be noted, however, that the legal framework and
the labor practices in Korea differ form the systems of
industrialized countries in a few areas and that this difference
should not be interpreted as a sign of outright denial of the
basic labor rights of workers.

Labor policies in Korea should be set forth within the
context of the overall objectives of economic development as
well as the cultural and historical background of the nation. In
terms of generating employment opportunities and improving the
general welfare of workers, the provision of unlimited power to
strike may not represent the most appropriate solution. The role
of the government in industrial relations in Korea as a
developing country cannot, due to obvious reasons, be identical
to an industrialized country.

As Korea becomes more and more industrialized and her
work force expands, industrial conflicts occur more noticeably.
Occurrence of industrial conflicts, by no means are completely
avoidable. Both parties, labor and management, and the
government as a moderator, are currently in the midst of a
learning process through with great pain in some countries and
somewhat less in others. All the parties involved are making
continuous efforts to positively resolve the labor problems Korea
faces and to devise ways and practices through which industrial
peace can be achieved.

In looking at Korea`s present situation, the nation has
expanded employment opportunities significantly, wages have
increased substantially, and the general levels of social welfare
of Korean workers have improved at remarkable rates. These
high growth rates were primarily made possible through Korea`s
rapid economic development based on an outward-looking policy
of export promotion.

In this regard, many Koreans see the connection between
the U.S. GSP program and the Korean labor rights as a
spurious protectionisitic measure by the United States.
Economically, the removal of the GSP for Korea will create
extreme industrial and external pressures on the labor-intensive
export industries. Thus hindering, not helping the progression of
the welfare of Korean workers.

In conclusion, Korea`s labor system is rooted in the nation`s
cultural and historical background, designed to suit the needs of
the country at its current level of economic development, and it
is practical in its provisions and requirements. The system does
not match laws and practices prevailing in more developed
countries, but it does not necessarily mean a denial of workers`
rights. Therefore, Korea`s current labor policies are not a valid
source for complains or sanctions against Korea.

Summary

Working Paper Collective Bargaining in Korea : Laws, Practices and Recommendations for Reform (Preliminary)

Collective bargaining institutions and practices in the
Republic of Korea have been neglected subjects in its annals of
academic research. This neglect can be traced to several factors
but only two of the factors warrant mention. First, for the past
twenty years, Korea's extraordinary march from economic
undevelopment to economic development has been led by
ambitious programs of industrialization and export expansion. To
a great extent, these programs have relied heavily on the
intensive use of the labor factor and on social stability for their
success. Because of the importance of these two aspects of
Korea's development plans, researchers and research institutions
have shied away from the study of collective bargaining
problems because of the fear that to do so inadvertently might
trigger adverse political and social reactions which could threaten
the nation's plans for economic development.

In general, it is safe to say that the Korea bargaining
subjects. Second, since 1971 when Korea's collective bargaining
laws and practices were severly constrained by Presidential
Decree and statute, many of her labor-management problems
went unreported. Consequently researchers have been repeatedly
frustrated by either the absence of questionable reliability of data
on critical aspects of Korea's labor relations with management.
The data required to support a wide range of factual statements
about collective bargaining relationships simply have no been
available and this limitation also has discouraged research on
collective bargaining in Korea.

The first concern mentioned above recently has lost its
standing. Following President Chung Hee Park's death on
October 26, 1979 and through May 14, 1980 a rash of labor
disputes erupted in korea. The social and political instability in
this sector and in others spurred new interest in the study on
collective bargaining. Belatedly, perhaps, there has been a
general realization that as Korea's economy has changed and
grown, her collective bargaining institution has not changed.

Thus, there exists a pressing need to identify the
developmental failures in Korea's collective bargaining institution
in order that the system may be reformed and the weakness
remedied. As for the data limitations already mentioned, they
still exist. Recently, some fairly reliable labor disputes data have
become available and they are reported and interpreted herein.
however, we too have not been spared th frustrations of
working with data which are vague in a number of
methodological respects.

This paper will help to fill Korea's analytical void in
collective bargaining. It is far raining and consequently many of
its parts, by necessity, are not covered in an exhaustive way. W
begin the paper with a brief prologue on what collective
bargaining is all about and we conclude it with a lengthy
enumeration of recommendations for collective bargaining
reforms. The middle parts of the paper contain discussions on
the following order of topic: Korea's labor relations practice and
problems. past and present: Korea's economic development
problems and its impact on contemporary collective bargaining;
Korea's major labor law institution and the collective bargaining
limitations they spawn; and an analysis of the content of labor
agreements negotiated in Korea.

The recommendations for reforming Korea's collective
bargaining system are written for inclusion, either in whole or in
part in Korea' s Fifth Five Year Development Plan. There is
little doubt that the Republic of Korea will need an improved
system for dealing with her labor relations problems which will
grown in magnitude as the process of labor intensive
industrialization continues to unfold over the decade ahead.

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