With globalization, international economy has been integrated, and it requires rapid responses from companies. That is why flexibility in labor market is required. Also as labor market is flexible, dismissal could be frequent, so adequate safety nets ...
With globalization, international economy has been integrated, and it requires rapid responses from companies. That is why flexibility in labor market is required. Also as labor market is flexible, dismissal could be frequent, so adequate safety nets for unemployed people are needed. Many foreign companies in Korea have mentioned that Korean labor market is not flexible because of strict restriction on dismissal. So, this paper attempted to seek for improvements in order to increase flexicurity (flexibility + security) of labor market in Korea through comparison with Denmark that has been known as precedent country in the flexicurity of labor market.
In flexibility, the first difference between Korea and Denmark is whether or not having the authority to terminate the employment contract with prior notice that is one month or more on the basis of the length of service. In Denmark, the employment contract between employer and salaried employee may be terminated by the parties after prior notice. In the case of the termination of the employment contract on the part of the employer, the period of notice is applied differently on the basis of the length of service. However, the Labor Law in Korea permits only dismissal with justice such as acquisition, transfer, merger by urgent business need.
The second difference is the procedure of dismissal. In Korea, employers have to notice dismissal to a labor union and have a conference with a chairman of labor union for choosing laid-off workers. However, in Denmark, there is no regulation like Korea, so it takes shorter than in Korea. Also the possibility of conflicts that are related to dismissal between employers and employees is rare.
In security, although it is easy to lay off, Danes do not feel uneasy because of unemployment compensation that is as much as 70% of the salary they earned and paid for 4 years. Furthermore, Denmark's unemployment insurance system has been improved in order to induce unemployed people's active attitude on searching for new jobs. However, in Korea, the unemployment compensation is as much as 50% of salary they earned and is paid for maximum 8 month(240 days).
Active labor market policies are also important in Denmark. Denmark's vocational training is based on lifelong learning. Also government, labor, management participate in vocational training program, so it is possible to reflect market demand quickly.
Through the comparison with Denmark's flexicurity, I would like to propose the belows for improving the flexicurity of labor market in Korea.
In flexibility, firstly it is necessary to release strict regulation on lay-offs. Secondly, it is necessary that the procedure for lay-offs is simpler in order for companies to adjust quickly to a new environment and technology. Thirdly, it is necessary that the protection for regular employees is applied differently on the basis of the length of service.
In security, firstly vocational training on the basis of lifelong learning is needed. Secondly, vocational training should be demand-centered program. To do it, labor and management also participate in vocational training programs.