What is Required to Make Nonstandard Work Better Alternative

Transcription

1 ILO Conference on Regulating for Decent Work: Innovative labour regulation in a turbulent World What is Required to Make Nonstandard Work Better Alternative Joyup Ahn (Korea Labor Institute and George Washington Univ. ) Jaimie Sung (Korea University of Technology and Education)

2 Nonstandard Work? More than a half of the employed are nonstandard workers!!! (1999.3, 50.3) (March, 1999)

3 Nonstandard Work as a Social Issue Increase in nonstandard work more than a half of the employed are nonstandard workers!!! March & ¼ years since the 1997 Economic Crisis Nonstandard work or Non-permanent work? Non-permanent workers = temporary employees + daily workers permanent employees The Monthly Economically Active Population Survey by the KNSO Workers = the employed + the self-employed The self-employed = employers + OAW (own account workers) + unpaid family workers 3

4 Nonstandard Work as a Social Issue No consensus on the definition of nonstandard work No representative data Arguments based on inappropriate survey, definition, its growth was a natural result of the increased flexibility of the labor market and diverse employment arrangement nonstandard workers should be protected from discrimination Already increasing trend in nonstandard work (statistical definition) since 1994 Negative characteristics low wage limited fringe benefits (incl. social insurance coverage) deficient job security 4

5 Recent Trend in Non-Permanent Work (1999.3, 50.3)

6 Nonstandard Work as a Social Issue The Supplement Survey of EAPS - Expert meetings by MOL and NSO to develop questionnaires to map out definitions of nonstandard work - August 2000, the first supplement survey Nonstandard work = 26% vs. 58% - Every August since then and some more in March Public debate since 2001 Korea Confederation of Trade Unions Federation of Korean Trade Unions A ban on discrimination against nonstandard workers Korean Tripartite Commission the Special Committee on Nonstandard work (July 2001) The Act on the Protection, etc. of Fixed-term and Part-time Employees (December 21, 2006; effective as of July 1, 2007) 6

7 Growth of Workers Worker Wage and Salaried Workers Self-Employed workers All Perm. Temp. Daily Share All Emp er OAW UFW G(workers): 2+% -6% 2-% ( jobless growth? ) Increase in UFW in 1998 and OAW in 1999 Huge increase in Daily workers in 1999 and its decrease since then Temporary employees in 1999 and moderate one Moderate growth in the employed negative growth in the self-employed 7

8 Recent Trend in Non-Permanent Work (1999.3, 50.3)

9 The Act Prohibit discrimination against and overuse of nonstandard work the max. length of employing nonstandard workers = 2 year considered as a permanently employed worker subject to prohibition of layoff not based on just causes Two year after the legislation has been effective debates on postponing the maximum length No conclusion in parliament until now Dissolve their contract or employ them as permanent workers See Lee B-H and S.M. Eun 9

10 The Size of Nonstandard Work Worker 14,149 14,584 14,968 15,351 15,882 16,104 Standard Workers Nonstandard Workers Contingent Workers Part-time Workers Atypical Workers Increase up to 37%(2004) and then decreasing trend to 33.8%(2008) Due to decrease in contingent workers No big change in atypical workers around 13% in part-time work about 7.5% 10

11 The Size of Nonstandard Work by Firm Sizes Firm Size All sizes ~4 workers ~ ~ ~ ~ worker and more The smaller the firm size, the higher share of nonstandard work 11

12 The Relative Wage Worker Standard Workers Nonstandard Workers Contingent Workers Part-time Workers Atypical Workers Less than two-thirds There have been some studies decomposing the wage gap some say no discrimination others proved existence of discrimination 12

13 Social Insurance Coverage NPP (National Pension Plan) Worker Standard Workers Nonstandard Workers Contingent Workers Part-time Workers Atypical Workers NHI (National Health Insurance) Worker Standard Workers Nonstandard Workers Contingent Workers Part-time Workers Atypical Workers EIS (Employment Insurance System) Worker Standard Workers Nonstandard Workers Contingent Workers Part-time Workers Atypical Workers

14 What Do Employers Says? The Korean Workplace Panel Survey (KLI) since % of sample workplaces utilize nonstandard work 2. The main reason of their utilization more flexibility of employment : 30.3% reduction in labor costs: 32.1% 3. the relative wage level of nonstandard workers = 79.9 the relative productivity = 77.6 No extra profit from utilizing nonstandard workers? the relative unit labor cost = The extra profit of 7.2%p Not apply fringe benefits 14

15 Flexibility matters? Nmean workers Nmax Nmean No -1 Fluctuation in the D(products) D(labor) Adjustment in employment/effective labor (NxH) by choosing the number of workers (free to layoff or recruit) schedule) or the number of working hours (fully flexible 15

16 Flexibility matters? No workers? Nmax Nmean No -1 Prohibition of layoff without just causes The legal maximum OT=16 h/week The flexible working hour schedule = within 3 months 16

17 Why wage gap? Wage S Ws Es Equilibrium: Eo (No, Wo) Trade union: Ws Wo Eo members: Ns Give-up of employer Wn Ea En For 0 profit, Wn for nonmembers D Wage gap: Ws-Wn O Ns No Employment 17

18 The optimal mix Ln Q=F(L; K) L =G(Ls, Ln) Q=F(G(Ls, Ln); K) Ws Wn RW=Ws(1+b)/Wn Eo L = G(Ls, Ln) MRS=RW at Eo Ws or b Ln/Ls θo = Ln/Ls ωo = Ws(1+b)/Wn Ls 18

19 Subconstracting? Fair trade matters? A market structure 1.A firm C has monopoly power in the goods market 2.In the firm C, there is a trade union, whose members are standard workers 3.There are many and relatively small subcontracting firms and their workers cannot organize trade unions 4.The firm C has power to the subcontracting firms as a monopsonist The trade union asks higher wage in collective bargaining. The firm accept it or the trade union goes to strike. Both calculate losses due to strike. Two options for the firm for profit maximization to raise price of its product or to cut the subcontracting price Less wage resources for the subcontracting firm lower wage for nonstandard workers in small-sized firms 19

20 Thank You All!