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The diverging political pathways of labor market reform in Japan and Korea.

In this article, I analyze diverging political pathways of labor market reform with an empirical focus on the cases of Japan and Korea. Despite similar trends of regulatory reform toward the increase of labor market flexibility, the patterns of labor market reform differed in the two countries. Japan adopted labor market liberalization for nonregular workers with the persistence of employment protection for regular workers. In contrast, Korea opted for regulatory reform for all workers while simultaneously strengthening workers' basic rights and improving protections for nonregular workers. I argue that the institutional features of the employment protection system determine the diverging patterns of labor market reform in Japan and Korea.

KEYWORDS: labor market reform, institutional features of the employment protection system, Japan, Korea

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UNDER INTENSIFIED GLOBAL MARKET COMPETITIONI ADVANCED INDUSTRIALIZED countries as well as developing ones have liberalized restrictive rules and regulations governing employment contracts and working conditions over the past few decades, embracing the principles of labor market flexibility (Imai 2006; Iversen 2005; Kim and Lim 2000; Miura 2002; Murillo and Schrank 2005; Park 2000; Wood 2001). By the early 1990s, policy debates over the transformation of rigid labor market institutions into more flexible ones dominated East Asian countries, especially Japan and South Korea (hereafter, Korea), where state-led developmental models had begun to stumble. A protracted recession after the bursting of the asset bubble pushed Japan to promote a series of labor market reforms in order to revive its sluggish economy. Similarly, the 1987 political democratization and the Asian financial crisis cast doubt on the viability of Korea's old labor model, in which repressive labor control combined with wage restraints undergirded state-led development. Japan and Korea responded to these political and economic challenges by taking important steps to reform the labor market, but they did so in very different ways.

In Japan, the conservative Liberal Democratic Party (LDP) government liberalized the labor market for nonregular workers (e.g., part-time, temporary, and fixed-term contract workers), but it rarely challenged the key principle of employment protection for regular workers (e.g., full-time permanent workers in large firms). By contrast, in Korea, the two center-left governments ruled by prolabor presidents prioritized the weakening of employment protection for regular workers while strengthening workers' basic rights and improving protections for nonregular workers. Korea's labor market reform, however, provoked intense political conflicts between chaebol (family-owned and family-managed large business conglomerates) employers, chaebol unions and workers, and policymakers in the processes of policymaking and implementation.

Why did the two countries respond differently to the common pressure for labor market reform? Why did a center-right government allow the opportunity of the economic crisis go to waste, retaining extensive employment protection for regular workers, whereas a center-left government promoted labor market liberalization across the board? I argue in this article that the institutional features of the employment protection system explain the diverging patterns of labor market reform in Japan and Korea. In Japan, the characteristics of the employment protection system, in which institutional arrangements had centered on implicit and explicit political exchange among employers, regular workers, and policymakers and had been entrenched in social and economic transactions, prevented employers and policymakers from proposing labor market reform for regular workers even in times of economic downturn. Instead, they opted to transfer the costs of labor adjustments to nonregular workers (mostly female, young, and elderly workers) excluded from the coverage of the political exchange.

By contrast, Korea's employment protection system, which had originally been imposed by the authoritarian regime and further consolidated by the power of labor unions after democratization, led to divergence in the policy preferences of employers and regular workers for labor market reform. Korean employers, especially in the chaebol sector, were forced to accept rapid wage increases and strong employment protections pushed by well-organized chaebol unions, representing the economic interests of the core regular workforce, without developing any labor adjustment mechanism in times of economic distress. Thus, they pressured the government to impose wage restraints on the labor market and to weaken the levels of employment protection for greater labor market flexibility in the process of labor market reform. Meanwhile, regular workers under the protection of enterprise unions fiercely endeavored to defend employment protections. Under these conflicting preferences of employers and regular workers for labor market reform, Korea's center-left policymakers advanced comprehensive labor market reform for regular workers, who did not have any political allies in the process of labor market reform (either employers or political parties/politicians), in exchange for the improvement of workers' political rights, public welfare programs, and employment protections for nonregular workers. Yet these reform policies ironically strengthened the level of employment protection for a small segment of the core regular workforce in large chaebol firms, while exposing both regular workers in smaller chaebol firms and small and medium-sized enterprises (SMEs) and nonregular workers to a much higher risk of job insecurity. By examining the politics of labor market reform in Japan and Korea, I analyze here the ways in which the institutional features of the employment protection system shape the interests and strategies of employers, workers, and policymakers for labor market reform and determine the patterns of reform.

In the first section of the article, I analyze several theoretical frameworks to explain the politics of labor market reform. In the second section, I examine the political dynamics of labor market reform in Japan, focusing on how the institutional configurations of the employment protection system resulted in labor market liberalization for nonregular workers on the margins along with the preservation of employment protection for regular workers in the core. In the third section, I explore how the institutional features of Korea's employment protection system affected its labor market liberalization for all workers in the face of political and economic challenges. In the conclusion, I provide further discussion of labor market reform in Japan and Korea.

Explaining Labor Market Reform

How and why labor market reform diverged across countries facing common pressures toward deregulation and liberalization have been some of the most debated topics in the field of comparative political economy (e.g., Iversen and Soskice 2009; Martin and Thelen 2007; Palier and Thelen 2010; Rueda 2007). Here I examine two possible theoretical approaches--the theory of the political partisanship of the government and the role of political institutions (especially neocorporatist institutions)--that may provide plausible explanations for the patterns of labor market reform. By testing their causal mechanisms against empirical evidence drawn from Japan and Korea, I demonstrate that neither of these theories adequately accounts for the diverging paths of labor market reform in the two countries. I then argue that the institutional features of the employment protection system account for the political processes and outcomes of labor market reform in Japan and Korea.

A first possible explanation for the politics of labor market reform is the political partisanship of the government. This line of thought points out that labor-friendly policies to shield workers from the vagaries of the market (e.g., strong employment protection and generous social welfare programs) can be attributed to left governments closely tied to labor unions (Bradley et al. 2003; Esping-Andersen 1990; Garret 1998; Huber, Ragin, and Stephens 1993; Huber and Stephens 2001; Korpi 1978, 2006). Two contrasting empirical cases--radical labor market reform during the Conservative Margaret Thatcher government in the United Kingdom and incremental labor market reform during the Social Democratic Gerhardt Schroder government in Germany--seem to support the argument that political partisanship of the government explains cross-national variations in the politics of labor market reform (Crouch 2005; Howell 2005; Kitschelt 2003; Wood 2001).

Departing from the simple dichotomy of the left-right ideological spectrum of the political partisanship of the government, a group of scholars has recently identified the political partisanship of the government combined with insider-outsider differences as a key variable to account for the politics of labor market reform, especially the rise of labor market dualism and inequality (Iversen and Soskice 2009; Iversen and Stephens 2008; Rueda 2007). Scholars within this camp, however, disagree as to whether social democratic governments foster or prevent the increase of dualism and inequality. David Rueda claims that social democratic governments (or, in his framework, left governments) have accelerated dualism and inequality between insiders and outsiders because they have prioritized the interests of insiders--their core constituencies--over those of outsiders, although he points to employment protection legislation and corporatism as two additional factors that mediate insider-outsider differences (Rueda 2007, 27-35). Meanwhile, other scholars argue that social democratic governments, combined with specific skills-training systems and wage coordination mechanisms, have effectively preempted the rise of dualism and inequality by expanding social protections for those most affected by labor market reform (Iversen and Soskice 2009; Iversen and Stephens 2008).

While the theory of the political partisanship of the government provides a compelling story for explaining cross-national variations in the politics of labor market reform in Western Europe, its theoretical framework is not consistent with empirical findings drawn from Japan and Korea. Contrary to the prediction of the theory of political partisanship, Japan's conservative LDP government maintained employment protection for regular workers, whereas Korea's center-left governments prioritized the relaxation of stringent rules on employment protection for regular workers. In Japan and Korea, the political partisanship of the government is an important factor in explaining the improvement of employment protection and working conditions for nonregular workers. For instance, the conservative LDP focused more on labor market liberalization for nonregular workers, whereas left parties (e.g., the Social Democratic Party of Japan--previously known as the Japan Socialist Party--and the current ruling Democratic Party of Japan) advocated protective measures for nonregular workers in the process of labor market reform. Similarly, in the case of Korea, the two center-left governments made efforts to enhance protection for nonregular workers (e.g., job security and social protection programs). Nevertheless, the political partisanship theory falls short in accounting for why Japan liberalized the labor market for nonregular workers while preserving protection for regular workers, whereas Korea adopted labor market liberalization across the board. In addition, although Rueda's insider-outsider difference framework might explain the increasing trend of dualism and inequality, it cannot sufficiently account for the mechanism of the rise of dualism and inequality in Japan and Korea, since left parties have attempted to reduce economic disparity between insiders and outsiders rather than favoring the interests of insiders.

A second possible explanation for the politics of labor market reform is the political institution approach, which presumes that a range of political institutions set the rules of the game and shape the incentives and strategies of actors in policymaking. In particular, the neocorporatist institution approach has drawn scholarly attention in examining cross-national variations in the politics of labor market reform. The neocorporatist institution approach predicts that the corporatist institutions of policymaking--comprising business, labor, and government--play an important role in safeguarding the interests of organized labor by allowing it to participate in labor market reform and effectively pressure governments to expand social protection for workers. By contrast, in the absence of neocorporatist political institutions, policymakers may pursue more drastic labor market reform by restricting the access of societal interest groups (especially labor unions) to decisionmaking and neglecting compensation for reform losers, namely workers (Martin and Thelen 2007; Visser and Hemerijck 1997).

While the neocorporatist institution approach accounts for incremental labor market reform with the expansion of social protections in coordinated market economies (as in the Scandinavian countries), this theoretical framework cannot adequately explain the politics of labor market reform in Japan and Korea. In Japan, the role of labor deliberative councils (rodo shingikai), which had been the locus of labor policymaking and were composed of the representatives of business, labor, and public interests (mostly labor scholars), has been drastically marginalized since the late 1990s because of the centralized authority of policymaking. The weakening of the neocorporatist institution facilitated the scope and speed of Japan's labor market reform for nonregular workers because policymakers were able to bypass labor deliberative councils that required reform actors to participate in intense negotiations over reform agendas (Miura 2002; Song 2010). These institutional changes in labor policymaking, however, did not prompt sweeping labor market reform that would undermine employment protection for regular workers. Meanwhile, the Korean government gradually shifted its labor market reform approach from labor exclusion to labor inclusion after democratization by establishing a tripartite system of labor policymaking; nevertheless, the neocorporatist institution did not effectively protect the interests of workers. For instance, although the Tripartite Commission contributed to the improvement of workers' basic rights and the expansion of social protections, it was utilized as a political tool of policymakers to facilitate comprehensive labor market reform as opposed to defending the interests of labor. Thus, the presence (or absence) of a neocorporatist institution, represented by labor inclusion in policymaking, cannot sufficiently account for the variations in the politics of labor market reform in Japan and Korea.

To fill this analytical gap, I argue here that the institutional features of employment protection systems explain the diverging patterns of labor market reform in Japan and Korea. According to the Employment Protection Legislation (EPL) index of the Organization for Economic Cooperation and Development (OECD), Japan and Korea share very similar institutional characteristics of employment protection. For regular employment (with indefinite employment contracts), both countries were located at the medium-high ranking of the rigidity of employment protection, with a score of 2.4 (as of 2003). In the case of temporary employment, Japan had a slightly lower level of employment protection (with a score of 1.3) than Korea (with a score of 1.7) (OECD 2004, 110-117). Additionally, Japan and Korea have both been well known for the institutionalization of the lifetime employment system.

Yet Japan and Korea present remarkable differences in the institutional arrangements of the employment protection system. First, the proportion of the regular workforce in the Japanese labor market has been larger than that in the Korean labor market, although it has continued to decline over the past two decades. As of 2008, nearly two-thirds of the workforce (67.9 percent) was employed as regular workers in the Japanese labor market, whose proportion declined from 80 percent of the workforce in the early 1990s. Meanwhile, slightly more than half of the workforce was hired as regular workers in the Korean labor market over the past two decades, except for the period of the Asian financial crisis, when the proportion dropped even below 50 percent of the workforce (47.9 percent as of 2000). (1) The smaller size of core regular workers in the Korean labor market further isolated these workers from forging an alliance with other reform actors in the process of labor market reform, such as nonregular workers or employers.

Second, despite identical levels of employment protection legislation and similar lifetime employment practices, these two countries also differ in the average number of enterprise tenure years (i.e., an indicator of stable employment within enterprises). (2) As of 2007, Japan's average number of enterprise tenure years (11.8 years) was almost twice that of its Korean counterpart (6.2 years), indicating a huge discrepancy between the two countries' institutional development of the employment protection systems (as illustrated in Figure 1). (3) Although large Korean firms (e.g., chaebols) provided stronger employment protections for workers than their SME counterparts over the past two decades, the average numbers of enterprise tenure years in large Korean firms and SMEs were almost identical during the mid-1980s, indicating the similar levels of employment protection across the size of firm (see Figure 1). In addition, the core workforce in large Korean firms (with more than 500 workers), equivalent to the chaebol workforce, was not even as tightly protected as the average workforce in the Japanese labor market, illustrating another different dimension of the employment protection system in the two countries. In a more comparative perspective, as of 1995, Japan had the second highest number of average enterprise tenure years (11.3 years) among OECD countries, just following Italy (11.6 years), whereas Korea was placed at the lowest rank in the length of average enterprise tenure years (5.7 years), even shorter than those of the United States (7.4 years), an archetypical model of easy firing and hiring practices for workers in the labor market (OECD 1997, 139). These differences illustrate the varying degrees of the institutionalization of employment protection in the Japanese and Korean labor markets, especially at the firm level.

In addition, the political mechanism of developing employment protection differed in the two countries. Japan's employment protection system has centered on the implicit and explicit agreement of employers, regular workers, and policymakers on job security for regular workers, in exchange for alternative labor adjustment mechanisms (e.g., flexible work arrangements, wage restraints, and hiring of nonregular workers) (Gordon 1998; Kume 1998; Miura 2002; Moriguchi and Ono 2006; Shinoda 2008). Meanwhile, Korea's employment protections (especially for blue-collar production workers) were consolidated by the strength of labor unions after the 1987 democratic transition, without the formulation of a mechanism of political exchange for alternative labor adjustments during economic downturns (Hwang 2006; Jung and Cheon 2006; Kim, Choi, and Yun 2010). In other words, Japan's employment protection has been far more extensively and strongly institutionalized, combined with the political exchange between employers, regular workers, and policymakers, whereas Korea's employment protection has been rather weakly institutionalized, as shown in its much shorter average enterprise tenure over the labor force.

[FIGURE 1 OMITTED]

Under these institutional features of the labor market, Japan could not encroach on the privileges of regular workers, but it liberalized the labor market for nonregular workers in order to respond flexibly to changing market conditions. By contrast, Korea opted for comprehensive labor market reform under the conditions of weakly institutionalized employment protection as well as employers' strong support for transforming the institutional arrangements of the employment protection system, in exchange for compensations for labor under the center-left government. In the following two sections, I elaborate the ways in which the characteristics of the employment protection system affected the political processes and outcomes of labor market reform by shaping the incentives and strategies of employers, workers, and policymakers in Japan and Korea.

Japan: Liberalization for Nonregular Workers, Employment Protection for Regular Workers

After the collapse of the asset bubble in the early 1990s, Japan's protracted recession prompted intense debates on the viability of the Japanese model of capitalism, known as a coordinated market economy or stakeholder capitalism. As an increasing number of companies began to focus on shareholder value and short-term economic profits, Japan's employment practices, which centered on long-term business relationships and stakeholders' interests (e.g., managers and workers), came under intense strain (Miura 2002; Tiberghien 2007). In response to changing economic conditions, Japan liberalized the rules and regulations of employment contracts and working conditions for nonregular workers (e.g., part-time, temporary, and fixed-term contract workers) as a tool to increase labor market flexibility; meanwhile, it surprisingly retained strong employment protection for regular workers despite its two-decades-long economic stagnation. Of course, Japan's employment protection system for regular workers has been under criticism by an increasing number of neoliberal economists and market-oriented employers, who have argued that Japan's rigid labor market institutions, represented by strong protection for regular workers, have been road-blocks for firms attempting to adjust to new business environments (Yashiro 2007). Nevertheless, a majority of Japanese employers and policymakers have supported the preservation of employment protection for regular workers, even though they have advanced a series of labor market reforms for nonregular workers over the past two decades.

Japan's employment protection system became institutionalized in the 1950s and 1960s when moderate "second enterprise labor unions" (daini kumiai), opposing militant and radical labor movements led by leftist union leaders and concerned about firms' productivity growth, paved the way for cooperation with employers at the firm level (Gordon 1998; Hyodo 1997; Moriguchi and Ono 2006). Large employers and their enterprise unions--exclusively representing regular workers--gradually agreed to secure employment protection for the regular workforce in exchange for assured managerial authority over the introduction of new technology, the rationalization of production, discretion in skills training, and job allocation in the workplace (Gordon 1998; Shinoda 2008). The limited options for shedding redundant regular workers in times of economic distress pressured firms to develop alternative labor adjustment strategies, such as work transfer, including shukko (temporary work transfer to affiliate firms) and tenseki (permanent work transfer), and the use of nonregular workers (mostly female part-time and temporary workers) as an economic buffer zone (Brinton 1993; Gottfried 2008; Hiwatari 1999; Rebick 2005; Reed 1993). Over the past two decades, these methods of labor adjustments have been further reinforced in the Japanese labor market in conjunction with the persistence of employment protection for regular workers. Both employers and policymakers endeavored to avoid any confrontations with regular workers and any political backlash in electoral competition, while accepting incremental regulatory changes on the margin through the expansion of the hiring of nonregular workers. More interestingly, according to recent surveys on Japanese firms' attitudes toward employment practices, strong support for employment protection for regular workers (i.e., the lifetime employment system) was still quite high and even increased over time despite its protracted recession (JMHLW 2010, 26-7; Noble 2011, 20-21). These results might illustrate the institutional resilience of the employment protection system in the Japanese labor market, which had been established through political exchange between employers and regular workers in postwar Japan. Meanwhile, employers have pressured regular workers and unions to accept wage restraints and other forms of labor cost reductions (e.g., the performance-based wage system and flexible work arrangements), as well as advocated for labor market liberalization for nonregular workers as a primary tool for increasing labor market flexibility, in exchange for retaining a high level of employment protection for regular workers (JMHLW 2006; Miura 2002, 2008; Nikkeiren Times, various issues; Thelen and Kume 2003; Yun 2009).

The government's public policies further strengthened implicit and explicit agreements between employers and regular workers over job security at the firm level. (4) A wide range of Japan's public policies aimed to minimize a risk of unemployment for male regular workers in economic hard times by offering alternative employment opportunities and/or providing financial subsidies to maintain jobs. Japan's policymakers advocated increasing labor market flexibility as a way to resuscitate its sluggish economy, but they did not regard the weakening of employment protection for regular workers as essential since firms were able to utilize other types of labor adjustment strategies to respond to economic distress (e.g., the hiring of nonregular workers). (5) In fact, employment protection was engaged with much broader social and economic perspectives than any other social welfare policies in Japan. Considering employment itself as a basic social safety net, policymakers always prioritized job security over other forms of social protection programs by implementing employment and wage subsidies, public works projects, and various social and economic regulations protecting firms (especially SMEs) from fierce market competition (Estevez-Abe 2008; Gao 2001; Miura 2002). (6) Japan's policymakers shared a similar view of employment protection for regular workers with employers in the process of labor market reform during the 1990s and 2000s. According to the Japanese Ministry of Labor's 1998 White Paper, the government proposed the "one-and-a-half model of earning in the family," entailing male breadwinners under the protection of the lifetime employment system and female secondary income earners on definite employment contracts (JMOL 1998). The conservative LDP, which ruled until September 2009, did not propose any form of labor market reform for regular workers, though it supported the liberalization of the labor market for nonregular workers (Jiyuminshuto 2006). (7) In fact, Japan's policymakers were more concerned about the institutional stability of the employment protection system for regular workers (mostly middle-aged male breadwinners) in the process of labor market reform in order to prevent any possibility of the collapse of the Japanese family structure (based on the male-breadwinner model) and the consequent problem of social dislocation. (8) Thus, labor market reform, which might weaken the levels of employment protection for regular workers, was not seriously considered as an available reform option for policymakers.

Japan had already advanced several rounds of marginal labor market reforms for high-skilled professionals in the late 1980s and early 1990s in response to changing market conditions; however, since the late 1990s, it has shifted the primary direction of labor market reform toward increasing labor market flexibility for a wide range of nonregular workers (e.g., part-time, temporary, and fixed-term contract workers) driven by the centralization of decisionmaking authority (e.g., the Deregulation Subcommittee). After Prime Minister Hashimoto Ryutaro stepped down in July 1998, the Obuchi cabinet (July 1998-April 2000) resumed legislative deliberation on the government-submitted bill on the revision of the Worker Dispatch Law (Rodosha Hakenho) in the Diet. Since the enactment of the Worker Dispatch Law in 1985, the government had added marginal modifications to the legislation in order to gradually expand the occupational categories eligible to hire dispatched workers (haken shain), the so-called positive list system. In the face of the mounting pressure of economic distress in the 1990s, the Japanese business community began to pressure the government to more extensively liberalize the secondary labor market, composed of nonregular workers, in order to increase labor market flexibility. For employers, hiring more nonregular workers would substantially save labor costs in wages and (statutory and nonstatutory) welfare contributions as well as reduce the costs of layoffs in order to offset the financial burden of retaining the high levels of employment protection for regular workers (Miura 2002; Yamakawa 2001).

Meanwhile, Rengo (the Japan Confederation of Trade Unions), as the only representative of organized labor in labor policymaking, was rather reluctant to discuss labor market liberalization for nonregular workers during the early 1990s, since it still emphasized its obligatory role as the peak labor association responsible for the working class, regardless of employment status. However, a majority of regular workers and enterprise unions already consented to management increasing the hiring of nonregular workers--not only dispatched workers, but also other types of nonregular workers, such as part-time, temporary, or fixed-term contract workers--for labor adjustments at the firm level, in exchange for job security for regular workers. (9) Rengo was unable to simply refuse labor market reform for greater flexibility in economic downturns; however, it also had to minimize the transfer of the costs of labor adjustments to its rank and file, namely regular workers. Thus, labor market reform for nonregular workers (dispatched workers, in this case) turned out to be a feasible reform option for employers, regular workers, and policymakers to form a political consensus at the bargaining table while avoiding challenges to the institutionalized practices of employment protection for regular workers. Rengo finally agreed to liberalize the hiring of dispatched workers by introducing the "negative list system," however it demanded that business and government add a clause to the legislation that would prohibit the hiring of dispatched workers in the manufacturing sector--in which most of Japan's unionized workers were employed (Imai 2006; Miura 2002; Song 2010). By doing so, Rengo attempted to protect the economic interests of its core members--(male) regular workers in large firms--while sacrificing unorganized nonregular workers in the process of labor market reform.

In 2003, another round of revision of the Worker Dispatch Law took place during the Koizumi cabinet (April 2001-September 2006), empowered with the increasingly centralized authority of policymaking driven by a series of political reforms since the late 1990s (e.g., administrative reforms and the creation of the Council on Economic and Fiscal Policy). The 2003 revision of the Worker Dispatch Law completely eliminated restrictions on hiring dispatched workers, even in the manufacturing sector, and extended the period of employment contract terms of dispatched workers from one year or less to three years in order to allow employers more leverage in adjusting to the business cycle (Araki 2005; Matsubuchi 2005). But Rengo did not explicitly oppose the complete liberalization of the labor market for dispatched workers, though it expressed its regret over the revision of the legislation. (10) Some scholars claim that given the common practices of illegally hiring dispatched workers in the manufacturing sector, Rengo might have believed that the further revision of the Worker Dispatch Law would not substantially change labor practices in the workplace (Miura 2005). Meanwhile, others point out that Rengo was more concerned about the 2003 revision of the Labor Standards Law, which would modify regulatory frameworks on the conditions of dismissing regular workers for managerial reasons, with whom Rengo's organizational interests were closely tied (Yun 2009). One noticeable change is that the 2003 revision of the Worker Dispatch Law accelerated the expansion of the hiring of dispatched workers, especially the rapid increase of male dispatched workers in the manufacturing sector. (11) According to the General Survey on Dispatched Workers (2008) by the Japanese Ministry of Health, Labor, and Welfare (JMHLW), 41.6 percent of dispatched workers were employed in the manufacturing sectors, the highest percentage, followed by 14.1 percent of dispatched workers employed in the wholesale and retail industries. (12)

In 2003, the Japanese government also revised the Labor Standards Law to increase the upper limit of the employment contract term for fixed-term contract workers from one year to three years (five years for highly skilled workers or workers over sixty years old), which would allow employers to hire contract workers for long-term business projects more flexibly (Matsubuchi 2005). Rengo emphasized that the government should include protective measures of employment stability for fixed-term contract workers (e.g., a prohibition on canceling employment contracts before expiration), but it did not oppose the basic principle of the extension of employment contract terms recommended by the Labor Conditions Deliberative Council. (13)

In contrast to the liberalization of the labor market for nonregular workers, Japan's policymakers further tightened employment protection for regular workers by codifying court precedents into legislation. First, in 2000, the government legislated the Labor Contract Succession Law, which stipulated the protection of workers' labor contracts in cases of corporate divisions when the government revised the Commercial Code to facilitate corporate restructuring and business reorganization under the pressures of economic distress. (14) By ensuring employment protection for regular workers in corporate restructuring, the government aimed to minimize job loss in the core regular workforce (Araki 2005, 39-40).

Second, the government revised the Labor Standards Law in 2003 by incorporating the case law doctrine on abusive dismissals into the statutory law. Japanese firms rarely dismissed redundant workers even in times of economic distress, deterred not only by legal protections but also by social norms and practices (Vogel 2006). Nevertheless, Japan's protracted recession and the rise of corporate bankruptcies increased the number of labor disputes over dismissals. Thus, the business community demanded that the government clarify legal guidelines on dismissing workers in order to prevent or quickly resolve disputes associated with dismissals in which conditions were only specified in case laws. At the same time, Japan's employers preferred to maintain the principle of employment protection for regular workers, since they wanted to avoid any confrontations with regular workers and continue to benefit from the positive externalities of strong employment protection, such as stable industrial relations and human capital investment to firm-specific skills, which they had arduously invested in since the 1950s and 1960s (Miura 2002). Not surprisingly, Rengo was very serious about blocking any revisions that might weaken employment protection for regular workers, one of the most critical concerns for its organizational survival as well as for its 'rank-and-file members. It argued that the government should include much stricter legal clauses to prevent arbitrary dismissals by employers. Japan's policymakers (especially politicians in the Diet), constrained by the institutional configurations of the employment protection system in the labor market, also further buttressed the principle of employment protection for regular workers in the process of legislative deliberation. (15) Despite conflicts over specific wording and expressions in the legal clause at the Labor Policy Deliberative Council and Diet, business, labor, and government leaders agreed to stipulate the doctrine of abusive dismissal in order to prevent dismissals that lacked objectively reasonable grounds or that were inappropriate in general social terms (according to Article 18-2 in the Labor Standards Law). (16) The codification of the case laws was interpreted as providing much tighter restrictions on employers' rights to dismiss regular workers for managerial reasons (Araki 2005; Hanami 2004).

Although the Koizumi cabinet pursued far-reaching market reform--so-called structural reform--to resuscitate its sluggish economy, it rarely challenged the principle of employment protection for regular workers. As mentioned earlier, some neoliberal economists advocated comprehensive labor market reform even for regular workers in order to increase labor market flexibility (see Yashiro 2007). In the process of policy deliberation and negotiations, however, they were not able to gain strong political support from the bureaucracy or LDP members because of the size of the regular workforce (representing more than two-thirds of the workforce) and the highly institutionalized practices of employment protection for regular workers in the labor market. In the process of labor market reform, Japan's policymakers endeavored to balance employment protection for middle-aged male breadwinners with labor market flexibility for secondary income earners, such as young, elderly, and female workers. As opposed to converging with the US model of the labor market, represented by the easy hiring and firing of workers, Japan has adopted a two-pronged strategy to cope with recent economic challenges: the liberalization of the labor market for nonregular workers (or outsiders) combined with the preservation of protection for regular workers (or insiders). The institutional features of the employment protection system, which had been based on implicit and explicit political agreement between employers, regular workers, and policymakers and entrenched as social norms and practices in the labor market, restricted the set of labor market reform options, while resulting in the increasing proportion of the nonregular workforce to over one-third of the labor force (34.1 percent in 2008). (17)

In March 2010, in response to massive layoffs of nonregular workers in the manufacturing sector amid the ongoing global financial crisis, the Democratic Party of Japan (DPJ)-led government (September 2009-present) submitted the government-led reform bill to reregulate the labor market by prohibiting employers from hiring dispatched workers in the manufacturing sector, although it remains under legislative deliberation in the Diet (as of March 2012). (18) Yet there have been no signs of regulatory changes in employment protection for regular workers as a way of balancing "overprotected" regular workers and "underprotected" nonregular workers in Japan.

Korea: Liberalization for All Workers, Except Chaebol Workers

The 1987 democratization began to break down the authoritarian regime's repressive labor control policy in Korea and prompted the organization of democratic labor unions. In the face of wage hikes driven by militant labor unions (composed of regular workers), the conservative Roh Tae Woo government (1988-1992) attempted to moderate excessive wage increases (e.g., the single-digit wage increase policy) by emulating the Japanese model of informal wage coordination, the shunto (or the spring offensive), and preventing firms from increasing corporate welfare benefits to compensate workers for wage restraints (e.g., the total wage system). Yet, during the period 1990-1993, Korea's wage growth rates surpassed its productivity growth rates by 1-5 percent, since the government failed to compel labor (whose organizational capacity was empowered by democratization) and business (which was more concerned about industrial peace, even in return for paying high wages) to abide by the government-led wage moderation policy (Kim and Seong 2003, 421; Song forthcoming). The subsequent conservative Kim Young Sam government (1993-1997) tried to build another mechanism of wage coordination by taking advantage of a tripartite system, departing from the government-led wage moderation policy. The Kim government delegated the National Council on the Korean Economy and Society (Kukmin Gyongje Sahoe Hyopuihoe)--a consultative body comprising representatives of the Korean Employers' Federation (KEF), the Federation of Korean Trade Unions (FKTU), and public interests (mostly academic scholars)--to lead wage bargaining at the national level with the goal of wage moderation at the firm level. (19) However, employers and workers (especially in the chaebol sector) did not respect the wage increase rates suggested by the council in collective bargaining at the firm level, which made the Kim government finally give up its political efforts to intervene in wage bargaining in early 1995.

After several policy failures in institutionalizing a mechanism of wage coordination over the economy, Korea's policymakers began to focus more and more on increasing labor market flexibility through employment (Kim, Choi, and Yun 2010, 86-87). Although Korea established employment protection for workers, it was the authoritarian Park regime (1961-1979) that originally imposed stringent restrictions on business and labor regarding the layoffs of workers, whose conditions were stipulated in the Labor Standards Law. (20) Despite the presence of a legal framework, however, the enforcement of the regulations on employment protection for workers was rather lacking at the firm level during the authoritarian regime. In particular, since the authoritarian regime depoliticized the working class by severely restricting collective labor rights (e.g., the prohibition on unions' political participation and the restriction on strikes and collective bargaining) and implemented repressive labor control to preempt any labor unrest (Choi 1997; Koo 2001; Lee 2009), stringent restrictions on worker layoffs did not in practice impose severe strains on employers' labor adjustment strategies. Since democratic transition transformed the political dynamics of labor movements and the power of labor unions, however, employers were forced to comply with the stringent regulations on worker layoffs.

In addition, the coverage of employment protection, the so-called lifetime employment system, did not extend beyond white-collar clerical workers in large firms and the public sector in the Korean labor market. During the 1960s and 1970s, low-skilled blue-collar production workers frequently changed workplaces across firms and industries, looking for high-paying jobs by taking advantage of shortages in the labor market. In addition, seniority-wage systems and corporate welfare benefits, two of the primary mechanisms to institutionalize strong internal labor markets by stabilizing high labor mobility, did not expand to low-skilled blue-collar production workers in the Korean labor market (Song 1991, 107-136). It was only after the 1987 democratic transition that chaebol employers gradually agreed to guarantee job security for blue-collar production workers, pressured by the surge of militant chaebol unions (Hwang 2006; Jung and Cheon 2006). (21) Unlike their Japanese counterparts, however, chaebol employers lacked assured managerial authority associated with work arrangements for intrafirm (or functional) labor market flexibility, confronting the opposition of labor unions to the introduction of new labor management practices in the workplace (Song forthcoming). Thus, Korean employers, who had to face the challenges of labor market inflexibilities--rapid wage increases, strong employment protection, and a lack of flexible work arrangements--pressured the government to relax employment protection for workers in order to facilitate labor adjustments through employment. When the Kim Young Sam government (1993-1997) introduced the Employment Insurance Program (effective as of 1995), the large Korean business community welcomed the program despite the costs of social security contributions, expecting that the program would be a prelude to eased corporate restructuring and downsizing by relieving the burden on management of retaining redundant workers (Song 2003, 413).

Korea's policymakers attempted to advance sweeping reform to transform its rigid labor market institutions, even before the Asian financial crisis, by taking advantage of the weak institutionalization of employment protection as well as employers' strong support for comprehensive labor market reform. In December 1996, the conservative Kim government submitted draft labor market reform bills to trade labor market flexibility for the improvement of workers' basic rights based on policy recommendations made by the Presidential Commission on Industrial Relations Reform (PCIRR), composed of the representatives of business, labor, and public interests. However, the final version of the legislation, unilaterally passed by the ruling party in the National Assembly, significantly favored the interests of business by adding mergers and acquisitions (M&As) as legitimate conditions for dismissing workers for managerial reasons. It also stipulated a delay of three years in the legalization of multiple labor unions at the national level, which prohibited the legalization of the Korean Confederation of Trade Unions (KCTU), a de facto second labor federation without legal recognition (Kim and Lim 2000). A month-long general strike led by two competing labor federations--the cooperative FKTU and the militant KCTU--forced the Kim government to reluctantly consent to the revision of the reform legislation in February 1997. The revised reform legislation postponed the implementation of employers' rights to dismiss workers for managerial reasons for two years and eliminated the conditions of M&As from the set of legitimate conditions of managerial reasons (Kim and Lim 2000; Kim 1998; Koo 2000).

As illustrated in Figure 1, stable employment within enterprises was not as deeply institutionalized in the Korean labor market as it was in the Japanese labor market, which indicates that a small segment of the labor force (mostly in the chaebol sector) was indeed covered by strong employment protection. Neither employers nor conservative policymakers stressed the potential advantages of strong employment protection given the lack of an alternative mechanism of labor adjustments. Rather, they prioritized the increase of labor market flexibility as a crucial factor in helping Korea's economy become more competitive and efficient in global markets. The power of organized labor, however, derailed comprehensive labor market reform at the national level under the political conditions of the lame-duck presidency (in the last year of a single five-year term). (22)

In the wake of the Asian financial crisis, then president-elect Kim Dae-jung, a center-left opposition leader who had promised employment protection for workers during his electoral campaign, reneged on his position and established the Tripartite Commission to discuss comprehensive labor market reform. In February 1998, after a month-long debate, the FKTU and the KCTU acquiesced to the immediate legalization of employers' rights to dismiss workers for managerial reasons--including M&As to facilitate corporate restructuring and downsizing--and to the introduction of the Worker Dispatch Law for dozens of occupational categories. Instead, the Tripartite Commission guaranteed the improvement of workers' basic rights (e.g., the legalizations of unions' political participation and teachers' labor unions) and the expansion of social protections for workers and the unemployed (e.g., the extended coverage and benefits of the Employment Insurance Program).

But although the Tripartite Commission forged sweeping labor market reform based on the political consensus among business, labor, and government, the legitimacy and effectiveness of the Tripartite Commission was persistently challenged from the beginning. First, the Tripartite Commission, as a presidential advisory body, lacked the legal authority to force societal interest groups and the bureaucracy, especially the Ministry of Labor (MOL), to respect their policy recommendations. (23) The KCTU, whose leadership was forced to step down in the face of the opposition of its rank-and-file members (mostly chaebol unions) to the legalization of the layoffs for managerial reasons, refused to participate in the second phase of the Tripartite Commission (June 1998-August 1999) and finally withdrew from the Tripartite Commission in February 1999. In addition, highly ranked MOL bureaucrats frequently downgraded the effectiveness of the Tripartite Commission in public and refused to consult it (Kim, Choi, and Yun 2010, 270-290; Lee 2009, 61; Roh 1999, 302). Second, under the pressure of the financial crisis, then president-elect Kim himself used the Tripartite Commission to preempt the political resistance of organized labor in the process of labor market reform, as opposed to institutionalizing consensus-based labor policymaking. After the legalization of employers' rights to dismiss workers for managerial reasons, the Kim government rarely used the Tripartite Commission as the locus of labor policymaking, especially after the second half of 1998 (You 2005, 385).

It cannot be disputed that the exigencies of the financial crisis affected the political process and outcome of labor market reform during the Kim Dae-jung government. However, it remains puzzling that the center-left Kim government did not even attempt to reverse the direction of regulatory changes despite Korea's rapid economic turnaround (10.7 percent and 8.8 percent economic growth rates in 1999 and 2000, respectively) as well as the strong policy demands of organized labor to repeal the legalization of the layoffs. (24) First, although his center-left party took a more labor-friendly position than the conservative opposition Grand National Party (GNP), it did not establish a party-union alliance because of weak social and organizational ties between political parties and societal interest groups (especially labor unions) and because of the underdevelopment of the Korean party system (Lee 2009; Song forthcoming). It enabled his government to undertake sweeping labor market reform during economic hard times without excessive worry over losing the political support of organized labor. In addition, Korea's organized labor, centered on large enterprise unions, lacked the political and organizational capacity to mobilize voters during electoral competition. (25) Second, the Kim government, to adjust to changing market conditions, prioritized job creation over job security by investing in social overhead capitals (SOCs) and SME venture businesses (especially in the information technology sector), job retraining programs for the unemployed, and the expansion of social protections (Korea Labor Institute 2010, 150-169; Kwon 2005; Kwon 2001). (26) By doing so, the center-left Kim government attempted to transform the institutional features of the employment protection system, which had covered a small segment of the workforce concentrated in the chaebol sector, while simultaneously alleviating the problems of labor adjustment by offering alternative employment opportunities for other workers (e.g., SME and nonregular workers).

The Kim government's labor market reform combined with the expansion of social protections for nonregular workers resulted, ironically, in the polarization of the workforce into chaebol workers and nonchaebol workers (e.g., SME and nonregular workers), since large enterprise unions overruled policymakers' original intentions for labor market reform by blocking the implementation of regulatory changes at the firm level and continued to secure the interests of union members. Core regular workers in large chaebol firms enjoyed far more strengthened internal labor markets for insiders, while all other workers were forced to accept a high level of job insecurity after labor market reform. As illustrated in several cases of corporate restructuring and downsizing, chaebol employers found it very difficult to dismiss redundant workers during corporate restructuring even if they had the legal rights to do so as a result of intense labor strikes (e.g., industrial disputes at Hyundai Motors, Daewoo Motors, and Ssangyong Motors). These conflicts associated with dismissals forced employers to choose "easy" labor adjustment strategies, such as outsourcing production lines to SMEs and hiring nonregular workers excluded from the protection of labor unions. As a result, during the period 1998-2002, the proportion of nonregular workers in the workforce increased from 46.9 percent to 51.6 percent. (27)

The center-left Roh Moo Hyun government (2003-2007) embarked on another round of labor market reform in April 2003. President Roh, a former labor lawyer, prioritized the reduction of economic inequality between chaebol workers and SME and nonregular workers based on the concept of "flexicurity" (flexibility plus security). While he was well known for his prolabor position at the beginning of his term, President Roh shifted his stance by suggesting that chaebol workers and their unions should make political concessions regarding the privileges of "overprotection" and high wages they enjoy so that employers could improve employment and working conditions for nonregular workers. For the center-left Roh government, employment protection for regular workers in the chaebol sector revealed the last vestiges of the strength of the large enterprise unions, which exacerbated the problems of labor market dualism and inequality, especially after the financial crisis. The KEF even announced that if chaebol workers and unions agreed to freeze wage increases, employers would promise to spend the portion of wage increases for the regular workforce on the improvement of employment and working conditions for the nonregular workforce (Chosun Ilbo, March 31, 2005; Korean Employers' Federation 2006, 7). Ironically, the center-left Roh government and large chaebol employers took the same position, siding with the weakening of the privileges of regular workers. In the face of a zero-sum logic of distributional conflicts between chaebol workers and nonchaebol workers (e.g., SME and nonregular workers), the political position of organized labor was drastically marginalized in the process of labor market reform.

In July 2003, the Subcommittee on Policy for Nonregular Workers under the Tripartite Commission submitted its policy recommendations to the Roh government (Korea Development Institute 2006, 109). But the political processes of policy deliberation and negotiation did not proceed smoothly. The FKTU and the KCTU argued that the MOL-drafted reform bills were probusiness because they eliminated restrictive conditions on hiring nonregular workers, whereas business claimed that the reform bills significantly favored labor because of strict requirements on discrimination against nonregular workers. In December 2006, after three-year-long intense policy debates, the KEF, the FKTU, and the government finally reached an agreement on labor market reform to improve protection for nonregular workers and to further relax employment protection for regular workers. The FKTU agreed to the MOL-proposed reform in return for a delay on the legal prohibition of payment of union officials' wages from the company payroll, which had been an institutionalized practice to co-opt labor unions during the authoritarian regime. Since the FKTU was mostly composed of SME labor unions lacking financial resources, the payment of union officials' wages was one of the most critical concerns for the FKTU to maintain its organizational survival. Meanwhile, the KCTU refused to come to the labor market reform bargaining table, demanding much stronger employment protection for nonregular workers, though its rank-and-file members (chaebol unions) were rarely concerned about the improvement of employment and working conditions for nonregular workers. The ruling Uri Party (with a legislative minority) and the conservative opposition GNP (with a legislative majority) consented to pass the legislation despite the resistance of the small opposition Democratic Labor Party, loosely affiliated with the KCTU.

To cope with the problems of dualism and inequality, the center-left Roh government endeavored to reduce economic disparity between regular workers and nonregular workers by relaxing protection for regular workers and improving protection for nonregular workers. The revision of the Labor Standards Law relaxed the procedures for dismissing workers for managerial reasons by shortening the prior notice period from sixty to fifty days, which was further reduced from fifty to thirty days in 2009 under the conservative Lee Myung-bak government (2008-present). (28) Simultaneously, the Roh government legislated the Nonregular Workers' Protection Law (effective as of July 1, 2007) to narrow the economic gap between regular workers and nonregular workers. It stipulated that employers must change the employment status of nonregular workers to that of regular workers after a two-year initial employment contract in order to improve employment protection for nonregular workers in precarious employment conditions and to reduce economic incentives for employers to hire nonregular workers as a labor cost-saving strategy. (29) To some extent, the Nonregular Workers' Protection Law enhanced job security for nonregular workers. A few large firms with financial resources changed the employment contracts of nonregular workers into positions with indefinite employment contract terms, but even these firms did not guarantee the same level of wages and fringe benefits as other regular workers, whose employment contract was considered a "semiregular" employment position (Chamyeo Jeongbu 2009). Regulatory changes at the national level still were not completely translated into changes in employment and working conditions at the firm level.

If employers, regular workers, and policymakers had made an implicit or explicit agreement on the institutionalization of the employment protection system in exchange for alternative labor adjustment methods, Korea's labor market reform would have been very similar to its Japanese counterpart (namely, the liberalization of the secondary labor market composed of nonregular workers with the preservation of employment protection for regular workers). But Korea, pressured by the strength of labor unions, developed an employment protection system for a portion of the labor force concentrated in the chaebol sector, where institutional characteristics became very different from those in Japan. These subtle but crucial variations in the institutional features of the labor market determined the diverging patterns of labor market reform in Japan and Korea.

Conclusion

Under the pressure for labor market flexibility, Japan and Korea took important steps toward labor market reform, but with different policy priorities. I argue in this article that the characteristics of the employment protection system shaped the diverging political processes and outcomes of labor market reform in the two countries. In Japan, the institutional configurations of the employment protection system based on the political exchange between employers, regular workers, and policymakers and embedded in social and economic transactions affected not only the policy preferences of employers and regular workers on reform, but also policymakers' reform options for liberalization for nonregular workers. By contrast, Korea's employment protection system, which had consolidated driven by the strength of large enterprise unions, imposed intense strains on employers' labor adjustment strategies in changing business environments. Thus, policymakers attempted to promote comprehensive labor market reform to cope with the problems of inflexibilities in the labor market in return for compensatory measures.

Despite the variations in the pattern of labor market reform, Japan and Korea have confronted similar problems regarding the rise of dualism and inequality between regular workers and nonregular workers. While a small segment of regular workers have been relatively shielded from the pressure of market forces (either by regulatory reform in Japan or by the power of large enterprise unions in Korea), a majority of SME and nonregular workers have faced the costs of labor adjustments in the two countries, posing serious political challenges for policymakers trying to cope with dualism and inequality. As illustrated in this article, in Japan the institutional configurations of employment protection for regular workers (namely, middle-aged male regular workers) have remained relatively stable, but a majority of young workers have been unable to join internal labor markets during the ice age of employment in the 1990s and 2000s (Brinton 2011). Additionally, the Japanese government can no longer rely on various public policy options to prevent unemployment because of the intense fiscal pressure of its rapidly growing public debt. In fact, the Koizumi government's structural reform substantially cut back the size of public works projects, whose share of the budget declined from 13.3 percent to 9.5 percent between 2000 and 2006. (30) The remaining problem will be whether the shrinking number of regular workers combined with an increasing number of young nonregular workers can ensure the long-term institutional sustainability of employment protection for regular workers in the Japanese labor market (Hamaaki et al. 2010).

In Korea, it was a few well-organized chaebol unions that continued to defend employment protection for their union members (namely, regular workers) at the firm level, despite regulatory changes at the national level. Unlike the situation in the Japanese labor market, a majority of chaebol employers have not made a commitment to job security for regular workers, and policymakers have continued to request that chaebol unions and regular workers give up overprotection and high wages as a prerequisite to solving the problem of dualism and inequality between chaebol workers and nonchaebol workers. Changes in the strength of large labor unions might provoke a series of consequent institutional changes in the Korean labor market; however, Korea may further deepen the segmentation of dualism and inequality if large enterprise unions maintain their firm grip on collective bargaining at the firm level.

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Notes

(1.) Japanese Ministry of Health, Labor, and Welfare, Basic Survey on Employment Structure, www.mhlw.go.jp; Korean National Statistical Office, Basic Survey on Employment Structure, http://kostat.go.kr.

(2.) It is valid that enterprise tenure years, which are derived from the levels of employment protection legislation, reflect the costs of dismissal. Nevertheless, enterprise tenure years reflect the stability of employment within enterprises (or labor turnover rates) interacting with labor management practices at the firm level, which cannot be fully explained by the levels of employment protection legislation.

(3.) One caveat is that enterprise tenure years include regular workers and a portion of nonregular workers. In Japan and Korea, enterprise tenure years are calculated based on the number of workers whose employment contracts are longer than one year. Since a portion of nonregular workers have employment contract terms longer than one year, enterprise tenure years do not represent the length of service within enterprises for regular workers. Nevertheless, considering that a majority of nonregular workers in the Japanese and Korean labor markets have employment contracts shorter than one year, enterprise tenure years can be used as an indicator to measure the levels of employment protection for regular workers.

(4.) Of course, the system of implicit and explicit agreements between employers and regular workers would soon crumble as employers revoked the terms of their social contracts with regular workers. To strengthen the credibility of the agreements, the government's public policy served to strengthen the credibility of the agreements.

(5.) Interview with a bureaucrat at the Japanese Ministry of Health, Labor, and Welfare, December 22, 2005, Tokyo.

(6.) The Japanese government also explicitly announced that the mandatory retirement age should be extended to sixty in 1973 (Matsutbushi 2005, 17).

(7.) Japan's policymakers have recently attempted to provide more protection for outsiders because of pressing concerns about rapidly rising inequality (kakusa) since the early 2000s.

(8.) Interview with a former chair of the Japanese Labor Deliberative Council, January 26, 2006, Tokyo.

(9.) Interview with a member of the Japanese Labor Deliberative Council, September 20, 2005, Tokyo.

(10.) See Rengo's press release www.jtuc-rengo.or.jp/news/danwa/2003/20030606_1116405909.html (accessed September 10, 2011).

(11.) According to Heidi Gottfried (2008, 187), more than 80 percent of female dispatched workers are engaged in clerical jobs, as compared to nearly 70 percent of male dispatched workers who perform professional or technical work.

(12.) Japan Institute for Labor Policy and Training (JILPT), JILTI Recent Statistical Survey Report, August 2009, www.jil.go.jp/english/estatis/esaikin/2009/e200908.htm (accessed August 3, 2010).

(13.) See Rengo's press release, www.jtuc-rengo.or.jp/news/danwa/2003/20030218_1116404511.html (accessed September 10, 2011).

(14.) Although the Labor Contract Succession Law protects workers' employment in the case of corporate restructuring, its application is limited to corporate divisions, excluding mergers and acquisitions and transfer of undertakings, unlike protections in the EU. See Araki (2005, 39-40).

(15.) See Nihon Horei Sakuin [The index of Japanese laws], http://hourei.ndl.go.jp/SearchSys/viewShingi.do?i=115601077 (accessed September 10, 2011)

(16.) The four prerequisites (stipulated in the case laws) were the absolute necessity of firing workers, the lack of alternative tools to avoid firing workers, the existence of a fair procedure to decide who will be fired, and an agreement with the representatives of workers.

(17.) Japanese Ministry of Internal Affairs and Communication, Statistics Bureau, Rodoryoku Chosa [Labor force survey], www.stat.go.jp/index.htm (accessed May 7, 2010).

(18.) According to the JMHLW, the number of dismissed temporary workers was more than 200,000 in the manufacturing sector between October 2008 and September 2009 (Japan Times, April 30, 2009).

(19.) The National Council on the Korean Economy and Society, which was established during the Rob Tae Woo government (April 1990), did not play a leading role in wage coordination until 1993; instead, the Ministry of Labor led wage coordination policies during the Roh government.

(20.) In fact, Korea is not a unique case in that the authoritarian regime restricted the conditions for worker layoffs. During the Franco regime, Spain established a similar set of labor market institutions to protect workers' employment. See Perez-Diaz (1987).

(21.) Unlike Japan's enterprise unions, which encompass blue-collar workers and low-ranking white-collar workers together. Korea's labor unions (especially in the manufacturing sector) were exclusively composed of blue-collar production workers, although low-ranking white-collar workers were allowed to join enterprise unions in principle.

(22.) Kim and Lira (2000) point out that the timing of the labor market reform--the fourth year of a single five-year term of presidency--was detrimental for the Kim Young Sam government, since it did not allow the government strong reform momentum for sweeping labor market reform, in particular in the face of the intense opposition of organized labor.

(23.) In May 1999, the Kim Dae-jung government strengthened the political authority of the Tripartite Commission in labor policymaking.

(24.) Korean National Statistical Office, http://kostat.go.kr (accessed August 6, 2009).

(25.) The Democratic Labor Party is an exception, since it has established a loose political linkage with the KCTU, which was composed of militant chaebol unions from the beginning.

(26.) Despite the rapid expansion of the Employment Insurance Program, only about 10 percent of the unemployed received insurance benefits during the financial crisis (Korea Labor Institute 2010, 162).

(27.) Korean National Statistical Office, http://kostat.go.kr (accessed August 6, 2009).

(28.) Korean National Assembly Parliamentary Debates, http://likms.assembly.go.kr/bill/jsp/main.jsp (accessed May 24, 2010).

(29.) Korean National Assembly Parliamentary Debates, http://likms.assembly.go.kr/bill/jsp/main.jsp (accessed May 24, 2010).

(30.) Japanese Ministry of Finance, www.mof.go.jp/index.htm (accessed May 20, 2010).

Jiyeoun Song is assistant professor at the University of Oklahoma. Her research interests lie in labor markets, social welfare policies, immigration, and varieties of capitalism. She has published in several academic journals, including Asian Survey and Governance: An International Journal of Policy, Administration and Institutions.
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Author:Song, Jiyeoun
Publication:Journal of East Asian Studies
Geographic Code:9JAPA
Date:May 1, 2012
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