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Subject   Agreement by Labor, Management & Government on Improving the Labor Market
Agreement by Labor, Management & Government on Improving the Labor Market – Tripartite Commission agreement of Sunday, September 13, 2015
노동시장 구조개선을 위한 노사정합의문 (외투기업 자문사의 요청으로 번약하게 됨 - 최초로 전문 전체 번역함 - 정봉수 노무사 작업)

I. Vitalizing Youth Employment through Cooperation between Labor, Management & Government

1. Efforts to expand youth employment
- As a way forward through the expected youth employment crisis over the coming three years, large companies and state-owned companies shall make efforts to increase new employment of the youth. The government shall ensure the provision of policy support for those companies hiring young applicants, such as with subsidies for employment, tax exemptions for job creation, exemptions from tax audits, providing long-term assistance for small and medium-sized companies (hereinafter referred to as “SMEs”), and providing favorable evaluation when choosing companies bidding for public contracts.
- By increasing investment and adjusting wages and working hours, Labor, Management and Government (Hereby referred to as “the Tripartite”) shall actively endeavor to develop a win-win employment ecosystem between the generations through expanding youth employment opportunities. In particular, management will make use of financial savings from introduction of peak wage systems towards employing more young applicants. Companies shall make further efforts to increase employment of the youth by refraining from voluntarily increasing the salaries of their high income directors and employees, and management will also share in equal efforts.
- In order to promote youth entry into SMEs, the Tripartite will lessen the gap in wages and benefits between large companies and SMEs, promote the competitiveness of SMEs and improve their working conditions, and actively support the best SMEs, such as future-oriented small companies.
- In order to promote business start-ups by the youth and increase their employment opportunities, the government will assist them through venture loan systems that benchmark domestic and overseas examples for technology-based startups. The government will also enlarge the scope of companies to which the Employment Impact Assessment will apply, to increase the effects of job creation.

2. Reinforcement of social support
- By means of reinforcing the public support of social enterprises, cooperative associations, startups, and public social services where youth like being employed, the youth shall be encouraged to find opportunities to engage in social activity.
- In order for the youth to receive systematic employment support from their school years, the school and job center shall work in cooperation, and it is necessary to expand and reorganize the employment success package centered upon the youth. In particular, opportunities need to be extended for participation in job training programs to increase employment of students in the humanities, arts and sports.

3. Employment promotion consulting body for the youth
- The Tripartite will create a separate consulting body of relevant government agencies, labor and management representatives, and labor specialists at the earliest possible juncture as a way of promoting youth employment in a concrete way.

II. Correcting the Dual Structure of the Labor Market

- As a means of reducing the dual structure of the labor market, the Tripartite will suggest a target for reducing the gap in wages and working conditions between large companies and SMEs, implement joint projects to accomplish targeted goals, and monitor implementation under cooperation between labor and management.

1. Mutual growth by means of win-win cooperation between contractors and subcontractors, and between large companies and SMEs
1-1 Vitalizing benefit sharing
- Labor and management at large contractors shall not pass on the cost of salary increases to subcontractor SMEs, and shall work towards mutual growth by improving competitiveness in terms of wages and benefits.
- Tax-related incentives will be given through this win-win cooperation between large companies and SMEs as they work to improve working conditions of subcontractor employees.
- The government will improve the mutual growth index, promote excellent models of benefit sharing, and look on participating companies favorably when those companies apply for policy funding and R&D subsidies. The government will also cultivate a joint countermeasure system between contractors and subcontractors, and expand its support of joint training.

1-2 Burden sharing by each member of the Tripartite
- The Tripartite will vitalize welfare projects for SMEs and irregular employees through the use of an intra-company labor welfare fund and introduction of a joint labor welfare fund between SME suppliers. The government will provide various tax benefits for contributions to those funds. In addition, the Tripartite will increase the labor welfare promotion fund and reinforce stability for irregular and low income employees.
- The top 10% of directors and employees, in terms of income, will refrain from increasing their salaries voluntarily, and use the resulting savings (plus additional contributions by each company) to enable the Tripartite to push ahead with improving working conditions for irregular and SME supplier employees. Labor and Management will make efforts to greatly expand the burden sharing and win-win employment movement, while the government will reinforce its support of win-win employment incentives and improve the taxation and social security system in accordance with this employment-friendly trend.

1-3 Strengthening the Tripartite partnership for win-win cooperation
- The Tripartite will create social responsibility action rules for win-win cooperation, and reward companies involved in excellent examples of such cooperation.
- The Tripartite will develop a system to vitalize labor and management participation and cooperation towards improvement of employee productivity and benefits, and expand on exemplary win-win cooperation between contractors and subcontractors.

1-4 Establishing fair trade orders and vitalizing the market economy
- Contractors will refrain from burdening subcontractors with the cost of the contractors’ low prices, while the government will support revitalization of the Coordination Council to Adjust Supply Prices. In addition, the government will vitalize the mandatory reporting system for unfair transactions, provide bidding restrictions to prevent unfair transactions, improve the payment system for subcontractors, protect anonymous informants, and promote the use of standard contracts.
- In order to correct the negative impacts of the “lowest bidder” system, the overall review bidding system applicable to public procurement contracts will be gradually expanded.
- The government will provide improvements such as through a classification system where standard wages are paid according to type of business and work.
- The government will refrain from price controls so as to avoid damaging companies in terms of their ability to employ, pay wages, and improve service quality.

2. Employing irregular employees and improving the discrimination correction system
2-1 Establishing healthy order in employment
- The Tripartite will prohibit unreasonable discrimination, hire regular employees for regular and continuous jobs as much as possible, refrain from using too many irregular employees just to save on labor, and work to reduce the number of irregular employees voluntarily in the mid to long term.

2-2 Leading role of the public sector
- The government will lead improvements to the employment structure by extending the current plans to convert the status of irregular employees currently engaged in regularly continuous work to regular employment (65,000 by 2015). The government will also vitalize its subsidy program to support private companies that hire irregular and regular employees.
- The government will strictly enforce guidelines to state-owned companies that are changing outsourcing companies engaged in cleaning, security, meal services, etc. for the sake of employee job security and working conditions, and review methods to promote long-term subcontracting.

2-3 Improving effectiveness of the discrimination correction system

-The government will strengthen auditing to correct discrimination and introducing a system of punitive penalties and compensation.

2-4 Strengthening protection of irregular employees
- Labor and management will implement measures for job security and improvement of working conditions for irregular employees, and work to enact relevant legislation as quickly as possible. The government will enforce labor auditing in order to prevent the use of “passion pay” (lower pay than minimum wage), unfair dismissal of employees during or upon expiry of their probationary period, etc.
2-5 Promoting job security for short-term employees
- The Tripartite will implement a joint fact-finding investigation, receiving opinions from specialists along with participation by relevant labor and management, and then prepare options for reflecting agreed items in regular National Assembly Session.
- Additional topics to be discussed: effective term and the number of contract renewals for short-term employees, the jobs for which dispatch is permitted, fields where irregular employment shall not be offered (such as those involving safety and the protection of life), the labor union’s power of attorney to apply for correction of discrimination, clarification of criteria to distinguish between dispatch and outsourcing, restrictions against dispatch being non-applicable to the top 10% of employment positions in terms of income, application of severance pay, etc.

3. Vitalizing the labor market
- Labor and management shall maintain job security by proactively coping with environmental changes, make personnel management efficient to minimize manpower reductions, and to make efficient operation possible of labor market internals such as wages and working hours.

3-1. Job security through establishment of reasonable HR management principles
- Labor and management shall create a culture of employing regular and direct employees as much as possible, and establishing reasonable HR management principles to provide security for existing employees and increase employment of new young people.

3-2 Clarification of standards and procedures for termination of employment contracts
- The Tripartite shall work on measures to improve all aspects of employment contracts through participation with labor, management, and relevant specialists to improve labor practices in personnel operations. Before the introduction of these improvements, the Tripartite shall establish an equitable evaluation system to minimize disputes and prevent abuse of the new system, and clarify the standards and procedures regarding establishment and termination of employment contracts according to law and judicial precedent. The government shall not unilaterally implement any measures but shall engage in sufficient consultation with labor and management.

3-3 Strengthening efforts for job security in times of managerial dismissal
- In cases where reduction of employment becomes necessary for managerial reasons, management shall make efforts to minimize such reductions through preventive measures such as wage and working hour adjustments, job transfers, business suspensions or leaves of absence, occupational training, etc. Labor shall work together with these efforts, and government shall improve its support by reorganizing the employment security project.

3-4 Clarifying procedures required for managerial dismissal
- Efforts to avoid dismissal shall be concretely stipulated in detail, with examples, in the Labor Standards Act, and a reemployment system shall be implemented in reality.

III. Strengthening the Social Security Net

1. Eradicating blind spots in social security insurances and improving effectiveness
- To expand application of the social security insurances and promote subscription eligibility for the premium subsidy program (Doo Ri Nu Ri project) shall be adjusted and applied effectively to businesses.
- Eligibility for social protection shall be gradually given to low income, self-employed business owners.
- The Tripartite will consult together regarding application of Industrial Accident Compensation Insurance for accidents occurring during commute times, occupational injury for emotional labor, etc. Labor and management will participate in the policy-decision process and operation of Employment Insurance and Industrial Accident Compensation Insurance.
- The government will implement general accounting support for the maternity protection project within Employment Insurance.
- Labor and management shall actively participate in establishing employment policies and in the operation of Employment Insurance to ensure their effectiveness and representativeness.

2. Improving the unemployment benefits system and operation
- The government will prepare comprehensive measures for improvement of the unemployment benefits system towards strengthening stability for unemployed people and to promote their reemployment. These measures shall improve effectiveness by extending the unemployment benefit period, increasing the level of benefits, expanding the scope of eligible recipients, widening the definition of “unemployment”, and strengthening support for reemployment. The necessary financial resources for these items will be shared with the burden between the labor and management.

3. Improving the employment support program for the socially disadvantaged
- To support effective employment of the socially disadvantaged, financial subsidies to participants shall be increased, the employment vitalization program shall be made more substantial, and the manpower and physical infrastructure of the job center shall be strengthened.
- Korean-type unemployment assistance, called “Tomorrow Hope-Seeking Project” will be used more effectively, and the scope of coverage and level of subsidies improved.

4. Protecting socially disadvantaged workers and improving their income
- Increasing household disposable income will promote stability for lower-income families and vitalize the domestic market. Continued efforts will be made to improve taxation and the social security system to reflect the employment-friendly trend.
- The Tripartite will actively cooperate to ensure establishment of 3 basic employment principles: prevention of unpaid wages threatening the livelihood of socially disadvantaged employees and early settlement of those wages, the use of written employment contracts, and compliance with the minimum wage.
- The Tripartite will jointly endeavor to have included in the Labor Standards Act and the Wage Claim Guarantee Act support for employees who have not been paid.
- The Tripartite will establish comprehensive measures to improve the infrastructure for labor inspections, remedy for infringed rights, strengthen the public-private cooperation framework and improve working process.

5. Minimum wage
- The Tripartite will establish mid and long term targets and increase the minimum wage to make it possible for the minimum wage system to contribute to distribution of income. Labor and management will implement a joint campaign to comply with the minimum wage, and the government will strengthen punitive action for violations and widen the labor auditing infrastructure.
- To determine a scientific and reasonable minimum wage, the Tripartite will consult together and propose comprehensive improvements on points of dispute such as statistical standards based upon the research of low income employees, the scope of wages included, part time employees working less than 15 hours per week, regional or industry-specific minimum wages, etc. by the end of May 2016.
- The Tripartite will propose comprehensive improvements after reviewing the effect of the current Earned Income Tax Credit (EITC) and considering the income compensation programs for low income employees such as the minimum wage and national basic livelihood security systems.

6. Strengthening support for working couples
- To support working mothers, the government will improve the availability of childcare by gradually increasing national public childcare facilities to 30% of the total childcare facilities available, requiring transparency from private childcare facilities, improving security for children and working conditions of caregivers, etc. Support will also be strengthened in areas where there is actual demand, such as for working couples.

7. Strengthening a demand-tailored employment benefit service
- In the interest of tailoring towards actual demand, the government will increase public employment services to the OECD average in terms of professional counselors, employment support programs and computer networks, and also advance civilian employment services through public-private partnerships.
- The government will consistently expand the employment plus welfare centers, then integrate job centers in the mid to long term in a way that they become “one stop” service centers, and provide integrated services between the employment & welfare computer networks and employment support programs.

8. Creating a society where occupational skills are vitalized
- To decrease various social evils such as polarization due to academic cliques and excessive certificates, and to cultivate a society where vocational skills are respected, the government will gradually expand NCS-based recruiting methods to state-owned agencies, and then to private companies.
- The government will cultivate a system where employees can work and study at the same time, extend this to high school and university students, and prevent discrimination against working students.
- The government will vitalize a joint labor-management occupational skill development project so that labor and management can actively participate in regional councils focused on human resource development.

IV. Resolution of Three Issues to Eliminate Uncertainty
1. Clarifying the ordinary wage system
1-1 Towards resolution of conflicts and disorder at many companies regarding issues related to ordinary wage, the Tripartite has decided to legislate the concept of ordinary wage and clarify standards regarding excluding allowances paid according to wage characteristics on the basis of the Supreme Court ruling of December 18, 2013.
(1) Definition
- The term “ordinary wage” means all kinds of money that the employer has determined to pay to the employee periodically and uniformly for his/her contractual work, regardless of how such payments are termed.
(2) Excluding allowances
- Ordinary wage will not include allowances to be paid differently according to individual employee’s particular situations or regardless of the work quantity or quality. Details will be defined in Enforcement Regulations.

* Exemplary allowances to be regulated in Enforcement Regulations
① Insurance premiums for employee health, security for the aged, and safety.
② Bonuses not yet fixed in terms of whether to pay or how much to pay according to employee achievement and other additional conditions.
③ Allowances to be paid later according to company business performance.

1-2 Labor and management will work together to simplify wage compositions and clarify payment conditions to prevent time-consuming disputes regarding payments included in ordinary wage, maintaining stability in employee income, and contributing to company productivity.

2. Revising laws and systems to reduce actual working hours
2-1 To decrease the practice of long working hours and advance the labor culture, the Tripartite will actively work together to reduce working hours to 1,800 hours per year on average for all industries by the end of 2020.

- The Tripartite will work together to legislate working hour issues as soon possible, improve the labor culture to assist married couples and reduce working hours, and extend the productivity-improvement movement throughout society.

2-2 Holiday work included in extended work
- Holiday working hours are included in extended working hours, as one week covers 7 days, and weekly working hours will be 52 hours (40 hours in weekly standard working hours + 12 hours in extended working hours).

2-3 Gradual application
- Holiday work will be included in extended work one year after revision of law, applying gradually in four steps, one step per year.
1st step: companies employing 1000+; 2nd step: companies employing 300~999; 3rd step: companies employing 100~299; and 4th step: companies employing 5~99.

2-4 Special extended work
- After holiday work is included in extended work, special extended work (more than 52 hours/week) will be permitted, but to prevent abuse, restrictions shall be included such as establishment of permitted reasons (increase of orders, etc.), procedures (written agreement with the employee representative), and maximums (8 hours per week). This special extended work will be allowed for 4 years first after holiday work is fully included into extended work in application. This special extended work system will be reviewed again to decide whether it will be maintained or not.

2-5 The government will subsidize SMEs in facility investment and labor costs due to business difficulties and reduced wages in accordance with the rapidly reduced working hours.

2-6 Reducing the scope of industries allowed to use special extended working hours
- Industries allowed to use special extended working hours are reduced from the current 26 to 10, with maximum working hours and minimum recess hours for the remaining 10 to be reconsidered and prepared along with business surveys and consultation within the Tripartite Commission by the end of May 2016.

2-7 Improvements to exceptional application of working hours
- Proposals for improvement of exceptional application of working hours (such as only for companies employing fewer than 5 employees, agriculture, etc. will be prepared through business surveys and consultation within the Tripartite Commission by the end of May 2016.

2-8 Supplemental measures for reducing actual working hours
- The Tripartite will reduce actual working hours and resolve blind spots, while labor and management will operate a working hours system automatically within the total working hours. However, labor and management shall not abuse working hours in the name of “protecting employee health”.

2-9 Flexible working hours system
- The unit period when calculating flexible working hours is one month (according to rules of employment), and 6 months (with consent of both labor and management), but is applied from the time permission for the special extended work has expired.

2-10 “Deemed working hours” system
- After business surveys and consultation with labor and management, the government will reconsider related work based upon those works which require, in light of their characteristics, employee discretion in terms of ways used to perform the work.

2-11 Use of all leave days
- The Tripartite will promote the continuous use of all annual leave in terms of the nature of the leave system, and cooperate to create a workplace culture compatible with home life. In particular, the government will play an exemplary role in spreading this atmosphere to all other businesses.

3. Improving the wage system to ease acceptance of retirement age
3-1 Efforts to improve wage systems
- As the May 8, 2008 agreement regarding wage structure improvement for job security, the Tripartite will work together in model development and revision of collective agreements and/or rules of employment so that wage structures like the peak wage system will develop in an employment-friendly way, with the government leading in this process.

3-2 Expanding the peak wage and peak working hour systems
- Labor and management will begin to adjust wage, working hours, and number of working days according to workplace situation to increase acceptance of the extended retirement age and gradual preparation for retirement. The government will support the development of suitable jobs, consulting, incentives, etc. so the extended retirement age and peak wage and working hour systems can operate in a reasonable manner.

3-3 Revising wage structures
- Labor and management will revise wage structures in a reasonable way that promotes job security for middle-aged workers, and a win-win employment situation between generations. Labor and management will implement wage structures according to the trend for revision and the criteria of job duties and skills.
- The Tripartite will ensure observance of the requirements and procedures necessary for revision of collective agreements and rules of employment regarding wage structure revisions, including introduction of a peak wage system. The government will not unilaterally implement the process, but engage in sufficient consultation with labor and management.

3-4 Support for wage structure revisions
- To promote autonomous revision of wage structures, labor and management will establish and operate an exclusive organization, with the government in active support. In particular, the government will expand and reorganize the “Wage Center” so that it provides current information on wage, develop a model wage structure and equitable evaluation criteria, identify and expand excellent examples, and support with consultation services.
- To promote reemployment of middle-aged persons, the Tripartite will strengthen the role of the “Hope Center for the Middle-Aged”, provide a life career program, develop jobs suitable for those approaching their senior years, improve workplaces, and vitalize outplacement. In particular, the Tripartite will focus on strengthening SMEs.

V. Establishing a Tripartite Partnership

- The Tripartite will decrease illegal unfair activities and unreasonable practices, and work hard to cultivate productive bargaining cultures for the purpose of reasonable, future-oriented labor-management relations that can contribute to job creation.
- The Tripartite will strengthen investment in development of labor and management group policy and human resources, and support regional cooperation of labor, management, the population and government, and the labor-management partnership program.
- To strengthen the function and role of the Tripartite Commission, the Commission will endeavor to implement draft legislation for system improvements agreed in the Tripartite Commission in 2013 to include participation of representatives for the youth and irregular employees, etc.

- The Tripartite will regularly share recent information on the economy, industry, and employment in the Tripartite Commission, and consult each other about bilateral cooperation towards improvement of government competitiveness and job creation.
- The Tripartite Commission will operate committees for each industry to strengthen social dialogue at the workplace level.

VI. Implementing & Disseminating the Agreements
- The Tripartite will implement the agreements faithfully, and endeavor to reflect them in the course of consultations at the region and industry level, and collective bargaining at individual workplaces.
- Items required to give substance to the agreements will be discussed at a later time. This includes the establishment of a Tripartite partnership to eradicate blind spots in labor rights and increasing representation by non-organized participants in labor, and other items regarding organizational improvements such as increasing productivity.
- The Tripartite will actively request support so that agreements can be quickly and effectively implemented through legislation and appropriate allocation of funds.


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