Reinforcement of Labor Market Dualism and Inequality in South Korea: The Legacies of State-led Coordination and the Dominance of Enterprise Unions

Abstract

This article examines why South Korea has failed to mitigate labor market dualism and inequality, despite a series of the governments policy efforts over the past two decades. It argues that the legacies of state-led coordination and the dominance of enterprise unions reinforced dualism and inequality in the Korean labor market. The legacies of strong state-led coordination over its market economy, which had been institutionalized and consolidated during the authoritarian rule, substantially weakened economic and political incentives for business and labor to develop a strategic coordination mechanism based on mutual interests and cooperation even after democratization. The dominance of enterprise unions, whose organizational structure had been also established during the period of the authoritarian government, further restricted the coverage of collective bargaining only exclusively to union members and strengthened a division between labor market insiders and labor market outsiders. The lack of strategic coordination and enterprise union-centered industrial relations have strengthened labor market dualism and inequality in Korea, as opposed to reducing them.