Doing Business in Korea: The Korea labor market under the Moon administration

The election of progressive President Jae-in Moon, after the impeachment and imprisonment of the conservative former President, led to, among other progressive proposals, pledges from the President
Moon Administration of sweeping changes to Korea’s Labor & Employment Law. The following appears in a publication supported by the Korean Government. The complete publication may be found at: Discovering Business in Korea. The following changes are the major changes proposed by the Moon Administration. The changes may have a significant affect on companies doing business in Korea and may lead to an increase in taxes as a percentage of GDP.

810,000 new jobs via expanding Korea’s public sector
President Moon vowed to create over 340,000 new government social service jobs and over 140,000 new government jobs in public safety and security, while converting 300,000 non-regular workers to
permanent workers. A non-regular worker, in Korea, is a worker without employment security. Thus, the conversion of these workers from non-regular status to regular status shall provide for these workers the protection of Korea’s strict Employment Security System and, likely, increase the
salary of these workers.

Impose limitations on the utilization of non-regular workers
President Moon has, additionally, vowed to propose a bill that some have named the “Special Act on Preventing Discrimination Against Non-Regular Workers”.

This Bill would, among other things, according to the President Moon Administration: impose limits on the use of part-time and fixed-term workers to only work that is seasonal or temporary;mandate that all workers are paid an equal sum for equal work; impose fines on employers that employ too high a percentage of Non-Regular Workers; and impose joint-employer liability on companies using in-house
contractors.

Expand childcare leave & benefits
President Moon has promised to expand paid Paternity Leave and increase Childcare Leave monetary benefits.

Reduce working hours
The maximum weekly working hours, in most cases, under present Korean law is 52 hours. However, the lack of adequate documenting of hours, among other things, has led some labor lawyers to believe that
workers work, in many cases, involuntarily far in excess of 52 hours each week. President Moon has pledged to require employers to adequately document hours worked, while promising to reduce
overtime exemptions.

Additionally, for parents with children under the age of eight years old, working hours are proposed to be reduced to six hours for up to 24 months without any pay cut by the employer.

Mandate a 10,000 Won minimum wage by 2020
The present minimum wage is KRW6,470. The minimum wage is set to increase in yearly phases until the KRW10,000 minimum wage is met in 2020.

Expand youth employment quota to non-governmental entities
A youth employment quota exists at present. However, this youth employment quota only applies to government and government-controlled organizations. President Moon may expand the 3% to 5% quota to larger nongovernmental entities. Non-compliance would, likely, lead to a fine.

Expand labor protection to insurance planners, delivery drivers &
private teachers
President Moon has vowed to expand labor law protections to workers that have been perceived to have been provided less protection under law. These workers include insurance planners, delivery drivers and at home private teachers. The details of this plan are not yet known.

Limit or prohibit the use of contracted workers for dangerous
activities.
Outsourcing of dangerous activities is a common activity in Korea that has, recently, gained attention because of workplace safety issues.President Moon has vowed to ban the practice, reasoning that more
compensation and stricter protocols should be in place if this work is not allowed to be contracted out.

Labor market & economy bullet points (OECD/MOEL Statistics)
OECD Statistics
The following are statistics from the OECD and the Ministry of
Employment & Labor. A full statistical profile for Korea may be found at: OECD Stats Korea
and MOEL Stats Korea

• 50.4 million population (2016).
• 0.4% decrease in population per year.
• US$ 35,751 GDP and rising (2016).
• 3.1% unemployment rate (May not capture the true picture,
because of calculation irregularities concerning youth
unemployment) (2017).
• Highest gender wage gap in OECD.
• One of the lowest percentage of workers working for firms with over
300 workers.
• Rapidly rising GDP per hour worked.
• First among OECD countries in student mathematic scores.
• One of the highest educated populations in the OECD.
• Low service sector efficiency.
• High manufacturing efficiency.
• Stable growth rate of around 3% per year.
• Low labor flexibility.
• Labor disputes:
o 2014: 111 labor disputes with over 650,000 lost hours.
o 2015: 105 labor disputes with over 440,000 lost hours.
o 2016: 120 labor disputes with over 2,000,000 lost hours.
• Low youth employment:
o 2014: 40.7%.
o 2015: 41.5%.
o 2016: 42.3%.
• 950,000+ receiving unemployment benefits (2016).

Korea has a dynamic workforce that often exceeds the expectations of employers. However, issues often arise for employers because of, among other things, the lack of understanding of Korea’s labor and
employment law, Korean employment realities, the lack of adequate vetting of employees prior to hiring and the lack of proactive construction of Employment Rules, Employment Agreement and employment grievance and disciplinary committees. Major changes are likely to occur in Korea’s Employment & Labor
Law under the Moon Administration. The changes shall, likely, lead to a need to a reanalysis of your Employment Rules, Employment Agreements and basic employment procedures. With a proactive
and experienced guide, you are well on your way to success in the Korean market.

SJ Law Firm, International Practice Group (IPG Legal) Labor & Employment Law Team
Our Firm and its lawyers have been recognized by leading legal rating agencies because of our strong
local connections.

Our Globally – Experienced – Locally-Connected attorneys and business professionals are intentionally different from the crowd. We love to work on the most complicated and contentious issues and
enjoy providing proactive street-smart advice.

We are intentionally different. Law firms are often criticized for lacking the will or ability to provide efficient, proactive and non-conflicted representation to clients. Clients and other law firms often turn to IPG after discovering this reality.

Our Firm and its lawyers have been recognized by leading legal rating agencies because of our strong local connections, a cutting-edge case management system and real on-the-ground international legal
experience coupled with a fierce passion for success.

Numerous international legal rating services have recognized our attorneys as leading attorneys in Business Law, Civil Litigation, Employment Law, Entertainment Law, Franchise Law and Criminal Defense Law.

Sean C. Hayes
Sean and IPG are often chosen over the ubiquitous Korean based local and international law firms when non-conflicted and aggressive representation is essential for success.

New York/International Attorney Sean Hayes received his legal education in Korea, the US and the UK. He is a Korean permanent resident and resides in Korea.

Sean Hayes is the first non-Korean employed as an attorney by the Korean Court System (Constitutional Court of Korea) and one of the first non-Koreans to be a full-time regular member of a Korean law
faculty. Sean is known, over his 16+ years in law, for his aggressive advocacy and candid NY-style street-smart advice. Sean is also one of the few attorneys with significant experience managing non-consulting
companies. He was an interim HR Manager and General Manager in a broad range of industries including in the Oil & Gas, New Tech, Pharmaceutical, Franchise and basic Manufacturing industries.
Sean works with a cadre of experienced and connected retired judges, prosecutors, in-house attorneys, government officers and former international law firm attorneys.

Sean has been recognized by numerous legal publications and rating agencies for outstanding service to clients both large and small. Recently, he was recognized by AsiaLaw as one of only two non-Korean
attorneys as a top attorney working in Korea. He handles many Employment Law issues for clients.

SJ Kook
Judge Kook is a retired judge who leads the criminal litigation and civil litigation teams for the firm. Judge Kook was a top graduate from Seoul National University College of Law and received an LL.M. from
Columbia University. Judge Kook handles many Employment Law issues for clients.

Judge Kook served for a variety of courts and as a research judge for the Constitutional Court of Korea. He retired from the bench after serving as a presiding judge for the Incheon District Court.
Judge Kook is a renowned litigator who has successfully obtained over 50 not guilty verdicts for clients in a broad range of individual and corporate criminal matters. Judge Kook has also successfully litigated
and arbitrated a broad range of civil matters for domestic and international clients.

Judge Kook is known for his approachable manner, ability to explain complex legal matters to clients and his passion to prevail in all cases that he handles.

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