Industrial Relations in MNEs (Focusing on Korean Cases) KLF-ACTRAV/ITC-ILO Asian Regional Workshop on Promoting Decent Work in MNEs & Their Supply Chains 19 Nov Sung-Jin Kim KOREA LABOR FOUNDATION(KLF)

Contents 1. Part I Industrial Relations 2. Part II Multinational Enterprises 3. Part III Industrial Relations in Korea 4. Part IV Industrial Relations of Korean MNEs 5. Part V Conclusion

Part I Industrial Relations

What is Industrial Relations?  Industry – any productive activity(land/natural resources, capital/money & labor)  Relations – relationship → Relationship between the employer(owner) and his/her employees within the industry  Management and employees  Management and trade union(s)

Labor Market  Buyers(employers) and sellers(workers)  Demand & supply in a free market  Equilibrium wage & equilibrium employment  Currently, labor market is demand/buyers’ market; labor of supply>demand for labor

Government Intervention  Market failure  Labor is not a commodity. Thus, should be protected by labor laws and regulations  Minimum wage fixation  But, challenging trend of labor market flexibility or deregulation

Conditions of Employment  Determined upon the mutual agreement on a equal footing  Forms of employment: direct vs. indirect; regular workers vs. irregular, contract, dispatched workers; full-time vs. part-time  Wages (including minimum wage), working hours (including overtime) & rest, holidays & paid leave  Industrial safety & health

Role of Trade Unions  Formation of trade unions: representation  Collective bargaining: most representative trade unions  Collective agreements, better than laws and regulations  Collectively protecting the rights and interests of workers

Industrial Relations in Private & Public Sectors  More restriction imposed on the government and public sectors such as government ministries & agencies, hospitals, electricity, gas, water, railway, teachers, etc., but  Higher unionization rate: government sector> public sector>private sector

Part II Multinational Enterprises

What is the MNE?  Multinational enterprises (MNE) are companies that own or control productions of goods or services in one or more countries other than the home country.

How many multinational companies are there in the world? According to the World Investment Report 2009, published by the UNCTAD (United Nations Conference on Trade and Development)  889,416 multinational companies (MNCs) around the world  82,053 parent corporations  807,363 affiliates

 Exports by affiliates of parent corporations are estimated to account for about 1/3 of total world exports of goods and services  Number of people employed by affiliates of parent corporations worldwide totaled about 77 million in 2008  And they are increasing year after year.

Employment Zero Sum Game?  Investment in the hosting countries contributes to the employment creation & technology advance.  Job shifting from investing country to hosting country?

MNEs & Race to the Bottom  Globalized economy  Greed and competition  Production base for exports  Inequality  Working poor  Minimum wage vs. living wage  Long working hours

Brakes on Unbridled Greed & Abuse  ILO Conventions & Recommendations(  ILO MNE Declaration(  OECD Guidelines for Multinationals(  UN Global Compact; human rights, labor, environment, anti- corruption(  Global Reporting Initiative(GRI)(  ISO 26000(social responsibility)(

Corporate Sustainability Company for the future Economic Environmental Social

Stakeholders  Employees – wages & decent living  Shareholders - dividends  Supply chains; Partner companies/Vendors – co-prosperity  Government(central & local) - tax  Community – growth & development, environment  Customers - satisfaction

Value Chains & Supply Chains Materials Production Distribution/Sales Service Waste/Recycling

Global Code of Conduct  Ethical management; integrity & transparency  Corporate social responsibility(CSR); respect & contribution  Creating shared value(CSV); sharing

Part III Industrial Relations in Korea

Industrial Relations in Korea  Before under the control of power  After 1987 – democratization, democratic and independent trade unions  Higher demands on wage and working conditions - unstable industrial relations  Lack of mutual respect and trust between employers and employees – liability up until today  Joining the ILO in 1991  Joining the OECD in 1996

 Asian financial crisis in 1997 & its impact on labor market in Korea – the mirage of lifetime employment; layoffs and the increase of precarious jobs  Improvement of trade union rights  Deterioration of employment security  Ratification of Core ILO Convention Nos: 100, 111, 138, 182  No ratification on Nos: 29, 87, 98, 105

Employees & Supply Chains as Major Stakeholders (Y Company)  Human rights protection education including prevention of sexual harassment  Trade union rights; unionization rate(99.8%) & collective bargaining  Prohibition of forced labor; labor management agreement before overtime & holiday work, ban on night work for pregnant workers  Prohibition of child labor under the age of 18  Prohibition of discrimination; equal pay for all newly recruited graduates  Code of conduct/ethics for supply chains & monitoring on their labor practices

Part IV Industrial Relations of Korean MNEs

Industrial Relations of Korean MNEs Affecting factors  CEO’s perspective of parent corporations toward trade unions  Laws and regulations in the hosting countries  Trade union movement in the hosting countries  Level of social dialogues in the hosting countries  Compliance and customers’ responses

Case I. A company  ‘No union’ management philosophy  Consultation only  But, trade unions are conceded in China, Brazil as exceptional cases

Case 2. B company  Union recognized, but  Union corporatism favored  Lack of mutual trust & respect

Case 3. C company  Union recognized as a partner  Collective agreement  Equal participation in labor-management council and OSH committee

Case 4. D company(vendors)  No union in the head office which is not engaged in the production, but rather as a controlling tower of the global production  Unions recognized due to the global pressure from the global brands/buyers  Indonesia, Bangladesh, Cambodia, Vietnam, etc.

Part V Conclusion  Education for workers & organizing  Union capacity building for better and effective social dialogue at all levels  Fight for decent jobs with living wages and adequate working conditions  Solidarity support from the parent company unions or trade union movement of the investing country  Getting connected(communication) globally

 International survey and compliance monitoring  Promoting global framework agreements between MNEs and GUFs  Not a single Korean MNE yet to reach the GFA.