U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Box 6.3 Labor market conditions in Korea
Korea maintains and enforces legislation that protects workers’ rights and has become a contributor to International
Labour Organization (ILO)-sponsored projects in other countries. Several groups indicate, however, that problems
persist in Korea’s workers’ rights regime, most notably with regard to temporary employment, migrant labor, the right
to organize and bargain collectively, and working conditions in the Kaesong Industrial Complex.
As compared with the United States, Korea has a smaller labor market, a lower unemployment rate, and lower labor
costs. Specifically, the Korean labor market comprised 23.7 million workers, posted an unemployment rate of
3.7 percent, and registered an average labor cost of $13.56 per hour for manufacturing-sector production workers 1 in
2005. 2 In that same year, the U.S. labor market comprised 149.3 million workers, registered an unemployment rate
of 5.1 percent, and posted an average hourly labor cost for manufacturing-sector production workers of $23.65. 3 The
service sector is the principal employer in both countries, accounting for 65 percent and 78 percent of total employment
in Korea and the United States, respectively, in 2005. 4
Korea has undertaken international obligations on labor standards, having ratified four of the eight fundamental ILO
conventions on workers’ rights, two of which pertain to the ban on child labor, and two of which address discrimination
in employment. 5 The U.S. State Department reported that Korean law provides a number of workers’ rights protections,
including measures protecting the right to associate, organize, and bargain collectively; standards regarding minimum
employment age; and prohibitions on forced, compulsory, and child labor. 6 The OECD noted that Korea has taken
steps to improve its labor legislation in recent years. 7 Although arrests of union officials typically exceed 200 per year,
a representative of the Korea Labor & Society Institute (KLSI) indicated that law enforcement generally limits such
arrests to organizers of nonpeaceful demonstrations. 8 The U.S. Embassy in Seoul reported that Korea has improved
the enforcement of certain regulations, meets minimum standards on this issue, 9 and has demonstrated a commitment
to employee welfare in the region by contributing $500,000 to ILO-sponsored projects that will address various labor
issues in six Asian countries. 10
1 Data reflecting overall average labor costs in Korea are unavailable.
2 EIU, “Country Commerce: South Korea,” July 2006, 93; and USDOL, BLS, “Hourly Compensation Costs for
Production Workers in Manufacturing,” April 30, 2007.
3 EIU, “Country Commerce: United States of America,” May 2006, 68; and USDOL, BLS, “Hourly Compensation
Costs for Production Workers in Manufacturing,” April 30, 2007.
4 World Bank, “WDI and GDF Online.”
5 Korea’s ratification of these four core conventions took place relatively recently, with the earliest ratification
having occurred on December 8, 1997 and the most recent ratification having occurred on March 29, 2001. ILO,
“Ratifications of the Fundamental Human Rights Conventions by Country,” June 20, 2007.
6 USDOS, “Korea, Republic of,” Country Reports of Human Rights Practices, March 6, 2007.
7 OECD, “Report by the Chair of the Employment, Labour and Social Affairs Committee,” 2.
8 USDOS, U.S. Embassy, Seoul, “The Past and Future of Labor Struggles in Korea,” June 2007.
9 USDOS, U.S. Embassy, Seoul, “Republic of Korea (Tier 1),” Trafficking in Persons Report, June 12, 2007.
10 ILO, “A New Era for South Korea,” March 2004.
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