With South Korea maturing as a society, communication and engagement, rather than confrontation, are becoming the preferred methods of conflict resolution in many sectors. The same trend is found in industrial relations, once swept by confrontation and feuds.

“The nation’s industrial relations have gradually become peaceful. The number of labor disputes registered hit the record low of 65 in 2011. It is time to consider ways to narrow the gap between perception and reality in this area,” Korea Labor Foundation general secretary Moon Hyung-nam said during a CEO roundtable, held at a hotel in Mapo, Seoul, on Dec. 4.

The discussion-driven meeting was hosted by the foundation under the title, “CEOs’ Perspectives on National Competitiveness and Industrial Relations.” The Global Competitiveness Empowerment Forum organized the debate session. LG Corp. executive vice president Kim Young-kee and Siemens Korea chairman & CEO Kim Jong-kap joined the roundtable with Moon. 

“It is rare to see labor disputes in the list of agenda from foreign chambers of commerce in Korea these days. Many of the foreign CEOs doing business here mention improvements in relations with the union,” said Siemens Korea head Kim, who also leads the Global Investment Forum created by the Ministry of Knowledge Economy.

“Management of Korea’s leading companies like LG are changing their attitude toward employees, shifting to stakeholder capitalism from the shareholder version. To achieve sustainable growth, they are seeking to build cooperative relations with employees, one of key stakeholders with customers, shareholders, and community members,” said LG’s Kim, who developed a model for LG’s human-oriented industrial relations.

Lingering negative perception

Labor relations in Korea have seen a sea change over the past decade, becoming more cooperative and less confrontational, thanks to the collaborative efforts of the government, businesses and labor unions. The number of declarations of cooperative labor and management relations almost doubled in one year to 4,685 in 2011 from 2,648 cases in 2010, according to the Korea Labor Foundation.

However, this positive change has not been reflected in global indicators of national competitiveness. In the ranking released by the Swiss-based International Institute for Management Development, Korea was ranked 22nd out of 59 countries in 2009, but in four labor-related indicators, including labor productivity growth, industrial disputes and labor market flexibility, and labor productivity, Korea ranked below 55. 

“Those labor-related indicators are based on actual data by country and CEO surveys. Korea received a poor score in the CEO survey, which means the gap between the perception of CEOs and reality over the nation’s industrial relations is still wide,” Moon said.

Korea has had a reputation as a nation controlled by wild labor unions mainly due to violent protests by red-headband-wearing union members of big corporate firms during annual negotiations on pay and conditions.

But in reality, the nation’s union membership is below the OECD average.

“As of now, Korea’s rate of union density, which represents the proportion of labor union participants among the entire population of wage employees, is about 10 percent. This is one of the lowest rates among OECD countries,” Moon said.

“It is a great pity to see industrial relations of Korea getting a low score in competitiveness indexes, especially, considering that Korea depends greatly on exports and foreign relations.”

Drive for change

To change the deep-rooted perception of the nation’s labor-management relations, Kim from LG Corp. proposed a drive to change outdated terms in this area.

“Words tend to form perceptions. One of the terms to change from the management side is ‘human resources.’ In the era of knowledge, employees are ‘human capital’ to be educated and invested for the company’s growth, not resources to be managed,” he said.

“The term ‘labor-management relations’ should be replaced by industrial relations in that the term itself brings a compelling image.”

Kim from Siemens also stressed rules and principles for better relations with employees.

Moon pointed out the need for better public relations on the issue.

“Continued improvement in industrial relations is key to bringing a change in perception,” he said.

Moon went on to say that the KLF, established in 2007 with trilateral agreement among labor, management business and government in order to advance the nation’s industrial relations, would develop activities to improve industrial relations of large companies with big unions.

By Seo Jee-yeon (jyseo@heraldcorp.com)