An Institutional Perspective
Chapter 11: Reforms of the Labour Market and Industrial Relations
11.1 INTRODUCTION There is a general consensus that Korean economic growth during the three decades from the 1960s was attributable mainly to the abundance of diligent and well-educated human capital, and the government's ability to utilize it (Kim and Lee 1997). With a limited industrial base and high population together with high unemployment, Korea initiated export-led industrialization with a surplus of labour in the early 1960s. However, within less than two decades, Korea was able to change that labour surplus into a labour shortage (S.K. Kim 2001). With a rapid rise in wages in conjunction with a labour shortage, companies adopted capital-intensive technology and production methods, whereby the business sector has carried on the development momentum. Industrialization of the economy since the 1960s and ensuing urbanization has changed the demographic configuration of the population. The fertility rate has dropped to the lowest level in the world and the growth rate of the population has been steadily declining. Korea's population is quickly becoming an ageing population. Korean labour relations have undertaken a metamorphosis in the last four decades since the 1960s. Up until the late 1980s, labour relations were seemingly peaceful and cooperative under suppression of union activities by strong authoritarian regimes. In conjunction with political democratization in 1987, labour market democratization also occurred, and government power and influence on labour management fell dramatically. Labour unions have frequently applied militant tactics for their causes. From the early 1990s, globalization forces also exerted substantial influence over industrial relations and government labour policy....
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