Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 2003 1 (9)
IS KOREAN ENTERPRISE BARGAINING A
BONA FIDE TOOL FOR EMPLOYEE
REPRESENTATION?
JOOYEON JEONG*
I
n the 1990s, Korean enterprise unions have faced radical changes in personnel
and work organisation policies in the wave of employer-led enterprise restructuring,
accelerated in particular after the national economic crisis of 1997. This study empirically and theoretically examines whether isolated enterprise bargainings exclusively
occurring at enterprise levels are inferior to coordinated bargainings beyond enterprise levels in defending employment security in this context.
INTRODUCTION
In the face of explosive demands from the public after 1987, for progress in
political and social democracies, the Korean government has generally loosened
its political repression of free union organisation and strikes (Kwon and
O’Donnell 1999). In this favourable political and social environment, and
during the unprecedented economic boom, union density rose from 15.7 per
cent in 1987 to 19.8 per cent in 1990, while vigorous enterprise bargaining
activities generated high annual wage growth rates (Jeong 2001). In contrast,
employers facing economic downturn after 1992 began radical enterprise
restructuring, accompanied by the growing popularity of temporary (part-time
or contractual) employees and subcontracting tasks, the adoption of performancebased pay systems, and cuts in the numbers of regular full-time employees (Jeong
1999). The changes in personnel and work organisation policies stemmed from
managerial efforts to save labour costs in the face of rising competitive pressure
in the private sector (Frenkel and Peetz 1998) and improve economic efficiency
in the public sector.
In the new environmental context, the primary agenda of enterprise bargaining has shifted from aggressively demanding material gains in the late 1980s to
defensively assuring employment security (Jeong 2001). Meanwhile, union
density plunged to 11.6 per cent in 2000 (Korea Labor Institute 2002: 145). This
paper examines whether and why the isolated enterprise bargaining structure,
confined to representing employees’ interests in one enterprise, is less effective
than coordinated bargainings in the attempt to ensure employment security. The
first form of bargaining prevailed in Korea as bargainings in about 84 per cent
(4740 unions) of 5637 enterprise unions at enterprise levels in 1999 (Ministry of
* Associate Professor, Department of Economics, Korea University, Seoul, Korea.
Email: jjooyeon@korea.ac.kr
THE JOURNAL OF INDUSTRIAL RELATIONS, VOL. 45, NO. 1, MARCH 2003, 94–100
KOREAN ENTERPRISE BARGAINING
95
Labor 1999: viii). Coordinated bargainings, chosen by the remaining 15 per cent
of those unions, are either centralised ones at region and industry levels or
coordinated enterprise bargainings aimed at building a common bargaining
strategy in demands and timing across individual enterprise bargainings.
This study utilises secondary sample data of 901 bargaining agreements
gathered by two national union associations: the Federation of Korea Trade
Unions (FKTU) in 1996 (Yun and Kim 1998) and the Korea Confederation of
Trade Unions (KCTU) in 1997 (KCTU 1998). These data can be roughly treated
as isolated bargaining agreements since those agreements are over-represented
in the data to reflect the predominance of this form of bargaining in Korea as
mentioned above. In February and March 2001, the author interviewed union
leaders in six industrial associations: the Metal, Auto Transport, and Chemical
unions of FKTU; and the Public Services, Metal Industry, and Hospital unions
of KCTU. The interviews aimed to evaluate the relative effectiveness of the
coordinated bargaining strategies of those unions and isolated enterprise
bargainings led by enterprise unions affiliated with them in defending employment securities between 1998 and 2001. The six unions, which organised 40.6
per cent of all union members in Korea in 1999, were among the ten largest of
all 43 industrial associations in 1999 (Ministry of Labor 2000: ii-iii). Both the
Auto Transport and Hospital unions had high degrees of coordination by
owning centralised city or regional bargainings and coordinated enterprise
bargainings respectively. The Public Service Union maintained an intermediate
degree of coordination by being involved itself in some of the enterprise bargainings led by its affiliated enterprise unions. In contrast, the Metal, Chemical, and
Metal Industry unions showed low levels of coordination, which left large
latitudes to enterprise unions in their isolated bargainings.
DO BARGAINING STRUCTURES MATTER IN THE DEFENCE OF
EMPLOYMENT SECURITY?
According to several of the union leaders interviewed, employer-led changes in
personnel and work organisation policies tend to threaten the security of
regular full-time employees in terms of stable jobs and incomes and, in turn,
undermine the organisational and bargaining capacities of unions. Temporary
employees usually demand half the wages of regular employees but meagre
non-wage benefits in Korea. Similarly, the extension of subcontracting tasks
enables employers to save on labour costs. As a result, employers are tempted to
either make similar downward adjustments in bargaining agreements for wages
and working conditions of regular employees or substitute those employees with
temporary and subcontracted workers. Since regular employees are exclusively
allowed to join enterprise unions in Korea, the rising popularity of temporary
employees and subcontracted employees replacing regular employees damages
the organisational and bargaining capacities of those unions. The growing managerial discretion in massive and individual discharges often unfairly targets
employees who are highly committed to vigorous union activities. Finally, performance-based pay systems undermine the union’s role of proactively leading
wage bargainings while strengthening managerial discretion in judging employees’ performances for wage determination.
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Isolated enterprise bargaining agreements showed generally disappointing
outcomes in relieving employment insecurities. Among 53.4 and 61.9 per cent
of FKTU and KCTU agreements, respectively, that owned regulatory voices in
massive discharges, 54.1 and 33.5 per cent, respectively, specified ‘consultation
with unions’ lacking actual binding forces for unilateral managerial decisions.
Union involvement was also limited in the hiring of temporary employees;
only 2.9 per cent of FKTU agreements and 10.3 per cent of KCTU agreements
specified ‘consultation with unions’. In extending subcontracting tasks, only
14.3 per cent of FKTU agreements and 21.8 per cent of KCTU agreements
owned that weak form of union involvement. In personnel policies on individual
discharge, among 25.7 per cent of FKTU agreements and 63.5 per cent of KCTU
agreements specifying certain forms of union involvement, ‘notification to unions
and individual employees’––weaker than ‘consultation with unions’––prevailed
in 80.9 per cent and 91.9 per cent of those agreements respectively.
In contrast to weak regulatory roles of isolated bargaining agreements, the
coordinated bargainings led by industrial union associations played a crucial role
in checking employment insecurity. The Hospital Union was well known for
achieving coordinated enterprise bargainings to block and regulate managerial
changes in personnel and work organisation policies in 2000. Through its
direct involvement in most bargainings of its affiliated enterprise unions, the
union won numerous enterprise bargaining agreements, including a shift
from temporary to regular employment status for employees after a certain
period of employment, compulsory union consent when hiring temporary
employees, and improvements in wage and working conditions of temporary
employees. As a result, the proportion of temporary employees in unionised
hospitals stayed at about 20 per cent––much lower than the national average.
In addition, many coordinated enterprise bargaining agreements blocked
managerial attempts to adopt a performance-based pay rule (Hospital Union
2001; 291).
Centralised city-level bargaining led by the Auto Transport Union also
partially succeeded in relieving various forms of employment insecurity. In
Incheon, the third largest city in Korea in terms of population, several bus
firms attempted to increase the proportion of temporary employees to 26 per
cent while 1.2 billion won in wages (about 1 million US dollars) was not paid
due to the poor business performances of those firms in 1999 (Auto Transport
Union 2000). Through its bargainings and associated political and social campaigns, the union succeeded in winning back employers’ concessions not to
hire any more temporary employees and solve the problem of unpaid wages.
This agreement generated a bargaining pattern for other cities to follow when
stifling centrifugal managerial attempts to withdraw from centralised bargainings, as was observed in Incheon. By focusing its limited financial and personnel
resources on bargaining led by approximately a third of its affiliated enterprise
unions, the Public Services Union was partially successful in blocking or revising
the government’s plan to save on labour costs by hiring temporary employees or
extending subcontracting tasks in 2000 (Public Services Union 2000).
In contrast, the Metal, Chemical, and Metal Industry unions generally failed
to build effective strategies for coordinated bargainings aimed at defending
KOREAN ENTERPRISE BARGAINING
97
employment security (Chemical Union 2000, Metal Union 2000 & 2001, Metal
Industry Union 2000 & 2001). This does not mean that the enterprise unions
affiliated to those unions always confronted seriously high degrees of employment insecurity. Some enterprise unions in large-sized firms organised by the
Metal Industry Union succeeded in maintaining an independent and militant
stance in their relations with employers and thus showed great bargaining and
strike leverage for resisting or negotiating unilateral managerial decisions. In
contrast, most enterprise unions in small- and medium-sized firms organised by
the Metal and Chemical unions generally owned very weak bargaining capabilities
for defending employment securities, mainly due to the paternalistic corporate
culture and strong managerial resistance to vigorous union activities, that were
salient in those firms (Jeong 1995). The average size of the bargaining unit in
the enterprise unions of the Metal Industry Union was 1355 employees in contrast to 212 in the Metal Union and 151 in the Chemical Union in 2000 (Chemical
Union 2000: 117, Metal Union 2000: 126, Metal Industry Union 2000: 36).
Therefore, besides the degree of coordination in bargainings, the bargaining leverages of individual unions were also influential when determining whether or
not employment insecurities were regulated effectively. However, despite these
discrepancies, isolated enterprise bargainings were generally less effective in
ensuring employment securities than coordinated bargainings.
ANALYSIS
The distinct outcome of isolated and coordinated bargainings in protecting
employment security may be attributed to their distinct structural, functional and
strategic features. Above all, employers could easily weaken the independent and
militant stance of unions in isolated enterprise bargainings (Jeong 1995 & 1999).
Enterprise unions are very familiar with current levels of and prospects for
corporate performances, while employers usually paid wages to their full-time
leaders in Korea even after the recent legal amendment to prohibit payment.
As a result, those unions are consistently exposed to managerial persuasion and
pressure, which usually calls for moderate bargaining demands by urging
unions to seriously consider their impact on corporate performance. Employers
are also in a structurally advantageous position to instil a strong corporate
culture and persuade employees that they ride in the same boat. Finally, since
union leaders and their members are employees in enterprise union structure,
their solidarity and determined actions in enterprise bargainings are vulnerable
to employers’ unfair treatment in wage determination, promotion and transfer.
The inherent structural weakness of isolated enterprise bargaining is particularly
serious in small- and medium-sized firms organised by the Chemical and Metal
unions.
In contrast, coordinated bargainings could maintain some degree of structural
independence from employers’ influence. Bargaining stances of unions in both
coordinated enterprise and centralised city-level bargaining neither has to be
highly sensitive to fluctuating corporate performances nor be vulnerable to
employers’ unfair personnel policies. They also usually possess powerful organisational and bargaining influences, originating from large-sized industrial union
associations that covered all employees in one industry.
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I N D U S T R I A L R E L AT I O N S
March 2003
In addition, isolated enterprise bargainings possess limited function in maximising their bargaining leverage. Those bargainings usually operate on the functional principle that they deal with subsequent impacts on labour at bottom the
workplace level emerging after the implementation of employers’ policies rather
than intervening in making decisions at the strategic, firm level. For example,
those bargainings were usually concerned with negotiating changes in wages and
work organisations rather than shifts in product and marketing policies generating those changes. The limited vertical, functional coverage of bargaining issues
inside firms caused unions to miss the chance to proactively negotiate and adjust
several strategic decisions in advance.
At the same time, isolated enterprise bargaining usually adheres to an
exclusive bargaining strategy for dealing with the firm-specific concerns of
employees of one firm while exhibiting lukewarm, selfish, and myopic responses
for similar concerns of other firms. For example, an enterprise bargaining for
improving wages and working conditions in one firm does not need to address
the concerns of employees in other firms facing serious threats to job and income
securities. The narrow horizontal coverage of bargaining issues confined to
one firm fails to generate formidable pressures on employers by pursuing the
strategy of coordinating bargaining demands and timing beyond enterprise
levels. Its limitation is particularly serious for enterprise unions in small- and
medium-sized firms because isolated enterprise bargainings in those firms do
not usually have self-sufficient capabilities to enable them to effectively regulate
managerial attempts generating employment insecurities. It explains why
69 per cent of 129 sample enterprise unions in a survey of the Metal Union
organising mainly small-and medium-sized firms prefer to build coordinated
bargainings at national, industrial, and regional levels rather than maintaining
the current isolated enterprise bargaining structure (Metal Union 2000: 234).
In contrast, some industrial union associations responsible for coordinated
bargainings could generate formidable pressure on employers at the decisionmaking stage through the use of political and social campaigns. Since the outcomes of coordinated bargainings, led by the Hospital, Auto Transport and Public
Services unions, have crucial impact on the provision of their services, the
relevant government agencies and employers could not always ignore the
Unions’ demands for consultation and negotiation in the stage. These Unions
can also impose great pressure on individual employers to admit their influence
by uniting and maximising the organisational and bargaining leverages of
numerous enterprise unions through a common bargaining strategy in terms
of demands and timing.
Besides the comprehensive vertical, functional coverage of coordinated
bargainings, those bargainings are also helpful in pursuing the inclusive bargaining
strategy concerned with broad employees’ interests beyond enterprise levels. This
strategic feature of coordinated bargainings corresponds with its structural
feature, monopolistic and inclusive status in employee representation in one
industry and region. The broad, horizontal coverage of bargaining issues is
achieved by adopting popular strategic menus, such as social campaigns, political consultation and negotiation and coordination of enterprise bargainings.
For example, in its use of social campaigns aimed at shaping public opinion, one
KOREAN ENTERPRISE BARGAINING
99
rationale of the Hospital Union to justify its opposition against the discharges
of regular employees and growth of temporary employees numbers faced by
numerous hospitals was that those changes would ultimately endanger public
health due to low morale and poor service qualities.
CONCLUSION
This study finds that isolated enterprise bargainings, compared with coordinated
bargaining, are inherently limited in ensuring employment securities due to their
structural dependence, limited vertical, functional coverage and narrow, horizontal
strategic coverage of bargaining issues. This finding generates some interesting
research agendas, which call for further comparative industrial relations studies.
Due to the relatively short history of isolated enterprise bargainings in comparison
with industrial and craft ones in capitalistic nations, the Korean case can provide
a valuable contribution to the current limited understanding of the subject. The
inherent weaknesses of isolated enterprise bargainings in Korea during the
employer-led enterprise restructuring of the 1990s contrasts with the prevailing
positive and stereotypical evaluation of those bargainings in the improvement of
both business performance and material rewards for employees during the rapid
economic growth of the 1970s and 1980s in Japan. These opposing evaluations
may be the result of not only different stages of growth of enterprise unions in
terms of economic growth stages and institutional stability between the two
nations (Jeong 1995), but also from different evaluation criteria, defending
employment security in this study and primary attention to the impacts of
enterprise bargainings on economic performance in previous Japanese studies.
In order to build a coherent set of theories considering various forms of
enterprise bargainings in diverse national contexts, further comparative
studies are required to consider the experiences of newly industrialising and
industrialised nations, transitional countries, and even advanced nations that
have recently experienced a proliferation of those bargainings resulting from
the dissolution of several centralised bargainings at regional and industrial
levels.
The Korean case may also be accepted as evidence in support of a general
theoretical hypothesis for inferior performances of isolated enterprise bargainings in ensuring employment securities––commonly observed in many advanced
nations. Several studies on Japanese isolated enterprise bargainings have questioned the existence of bona fide bargaining power due to their weak structural
and functional independence from management (Benson 1998), their inherent
submissiveness to management control (Galenson 1976), and inherent limitations
in internal union democracy (Seifert 1988). In the US, a similar question was
raised on isolated enterprise bargainings during the 1920s and 1930s (Jacoby
1983). In addition, isolated enterprise bargainings in Japan and the US respectively showed the limited vertical, functional coverage of bargaining issues by
weakly regulating strategic decision making for both enterprise restructuring
(Deutschmann 1987, Marsh 1992) and employee participatory programs at workplace levels (Parker and Slaughter 1988). Finally, isolated enterprise bargainings
in Japan revealed the narrow, horizontal strategic coverage of bargaining issues
by placing low priority on checking and reversing union decline in the industry
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and nation as a whole (Tsuru and Rebitzer 1995). Given the recent trend of
rapid decline of union density in the US and UK, new strategies combining
coordinated bargainings, political struggles, social campaigns and networking
organisation encompassing unionism at regional, community, and national
levels radically departing from conventional isolated enterprise and workplace
bargaining models, are considered as being able to reverse the trend
(Bronfenbrenner et al. 1998; Heery 1998).
REFERENCES
Auto Transport Union (2000) Annual Activity Report, Seoul: Auto Transport Union. (in Korean).
Benson J (1998) Labour management relations during recessions: Japanese manufacturing
enterprises in the 1990s. Industrial Relations Journal 29(3), 207–21.
Bronfenbrenner K, Friedman S, Hurd RW, Oswald RA, Seeber, RL (1998) Introduction. In:
Bronfenbrenner K, Friedman S, Hurd RW, Oswald RA, Seeber RL, eds, Organizing to Win:
New Research on Union Strategies, pp.1–15 . Ithaca: ILR Press.
Chemical Union (2000) Annual Activity Report, Seoul: Chemical Union (in Korean).
Deutschmann C (1987) Economic restructuring and company unionism – the Japanese model.
Economic and Industrial Democracy 8: 463–88.
Frenkel SJ, Peetz D (1998) Globalization and industrial relations in East Asia: A three-country
comparison. Industrial Relations 37(3), 287–310.
Galenson W (1976) The Japanese Labor Market. In: Patrick H, Rosovsky H, eds, Asia’s New Giant:
How the Japanese Economy Works, pp. 587–682. Washington, D.C.: Brookings Institution.
Heery E (1998) The relaunch of trades union congress. British Journal of Industrial Relations 36(3),
339–60.
Hospital Union (2001) Annual Activity Report, Seoul: Hospital Union. (in Korean).
Jacoby SM (1983) Union-management cooperation in the United States: lessons from the 1920s.
Industrial and Labor Relations Review 37: 18–33.
Jeong JY (1995) Enterprise unionism from a Korean perspective. Economic and Industrial Democracy
16(2), 253–73.
Jeong JY (1999) Personnel management policies for workplace restructuring and their implications
for industrial relations: A case in Korea from a comparative perspective. International Journal
of Human Resource Management 10(1), 89–107.
Jeong JY (2001) Pursuing centralized bargaining in an era of decentralization? A progressive union
goal in Korea from a comparative perspective. Industrial Relations Journal 32(1), 55–70.
Korea Confederation of Trade Unions (KCTU) (1998) An analysis of collective bargaining
agreements in 1997, Seoul: KCTU. (in Korean).
Korean Labor Institute (KLI) (2002) KLI Labor Statistics, Seoul: KLI. (in Korean).
Kwon S, O’Donnell M (1999) Repression and struggle: the state, the chaebol and independent
trade unions in South Korea. Journal of Industrial Relations 41(2), 272–93.
Marsh RM (1992) The difference between participation and power in Japanese factories. Industrial
and Labor Relations Review 45(2): 250–7.
Metal Union (2000 & 2001) Annual Activity Report, Seoul: Metal Union. (in Korean).
Metal Industry Union (2000, & 2001) Annual Activity Report, Seoul: Metal Industry Union.
(in Korean).
Ministry of Labor (1999 & 2000) An Overview of Trade Unions in Korea, Seoul: Ministry of Labor.
(in Korean).
Parker M, Slaughter J. (1988) Choosing Sides: Unions and the Team Concept. Boston: South End
Press.
Public Services Union (2000) Annual Activity Report in 1999 and 2000, Seoul: Public Services Union.
(in Korean).
Seifert W. (1988) Some thoughts on the problem of internal union democracy in Japan. Economic
and Industrial Democracy 9: 373–95.
Tsuru T, Rebitzer JB (1995) The limits of enterprise unionism: prospects for continuing union
decline in Japan. British Journal of Industrial Relations 33(3), 459–92
Yun SC, Kim JH (1998) An Analysis of Collective Bargaining Agreements (II), Seoul: Korea Labor
Institute. (in Korean).
BONA FIDE TOOL FOR EMPLOYEE
REPRESENTATION?
JOOYEON JEONG*
I
n the 1990s, Korean enterprise unions have faced radical changes in personnel
and work organisation policies in the wave of employer-led enterprise restructuring,
accelerated in particular after the national economic crisis of 1997. This study empirically and theoretically examines whether isolated enterprise bargainings exclusively
occurring at enterprise levels are inferior to coordinated bargainings beyond enterprise levels in defending employment security in this context.
INTRODUCTION
In the face of explosive demands from the public after 1987, for progress in
political and social democracies, the Korean government has generally loosened
its political repression of free union organisation and strikes (Kwon and
O’Donnell 1999). In this favourable political and social environment, and
during the unprecedented economic boom, union density rose from 15.7 per
cent in 1987 to 19.8 per cent in 1990, while vigorous enterprise bargaining
activities generated high annual wage growth rates (Jeong 2001). In contrast,
employers facing economic downturn after 1992 began radical enterprise
restructuring, accompanied by the growing popularity of temporary (part-time
or contractual) employees and subcontracting tasks, the adoption of performancebased pay systems, and cuts in the numbers of regular full-time employees (Jeong
1999). The changes in personnel and work organisation policies stemmed from
managerial efforts to save labour costs in the face of rising competitive pressure
in the private sector (Frenkel and Peetz 1998) and improve economic efficiency
in the public sector.
In the new environmental context, the primary agenda of enterprise bargaining has shifted from aggressively demanding material gains in the late 1980s to
defensively assuring employment security (Jeong 2001). Meanwhile, union
density plunged to 11.6 per cent in 2000 (Korea Labor Institute 2002: 145). This
paper examines whether and why the isolated enterprise bargaining structure,
confined to representing employees’ interests in one enterprise, is less effective
than coordinated bargainings in the attempt to ensure employment security. The
first form of bargaining prevailed in Korea as bargainings in about 84 per cent
(4740 unions) of 5637 enterprise unions at enterprise levels in 1999 (Ministry of
* Associate Professor, Department of Economics, Korea University, Seoul, Korea.
Email: jjooyeon@korea.ac.kr
THE JOURNAL OF INDUSTRIAL RELATIONS, VOL. 45, NO. 1, MARCH 2003, 94–100
KOREAN ENTERPRISE BARGAINING
95
Labor 1999: viii). Coordinated bargainings, chosen by the remaining 15 per cent
of those unions, are either centralised ones at region and industry levels or
coordinated enterprise bargainings aimed at building a common bargaining
strategy in demands and timing across individual enterprise bargainings.
This study utilises secondary sample data of 901 bargaining agreements
gathered by two national union associations: the Federation of Korea Trade
Unions (FKTU) in 1996 (Yun and Kim 1998) and the Korea Confederation of
Trade Unions (KCTU) in 1997 (KCTU 1998). These data can be roughly treated
as isolated bargaining agreements since those agreements are over-represented
in the data to reflect the predominance of this form of bargaining in Korea as
mentioned above. In February and March 2001, the author interviewed union
leaders in six industrial associations: the Metal, Auto Transport, and Chemical
unions of FKTU; and the Public Services, Metal Industry, and Hospital unions
of KCTU. The interviews aimed to evaluate the relative effectiveness of the
coordinated bargaining strategies of those unions and isolated enterprise
bargainings led by enterprise unions affiliated with them in defending employment securities between 1998 and 2001. The six unions, which organised 40.6
per cent of all union members in Korea in 1999, were among the ten largest of
all 43 industrial associations in 1999 (Ministry of Labor 2000: ii-iii). Both the
Auto Transport and Hospital unions had high degrees of coordination by
owning centralised city or regional bargainings and coordinated enterprise
bargainings respectively. The Public Service Union maintained an intermediate
degree of coordination by being involved itself in some of the enterprise bargainings led by its affiliated enterprise unions. In contrast, the Metal, Chemical, and
Metal Industry unions showed low levels of coordination, which left large
latitudes to enterprise unions in their isolated bargainings.
DO BARGAINING STRUCTURES MATTER IN THE DEFENCE OF
EMPLOYMENT SECURITY?
According to several of the union leaders interviewed, employer-led changes in
personnel and work organisation policies tend to threaten the security of
regular full-time employees in terms of stable jobs and incomes and, in turn,
undermine the organisational and bargaining capacities of unions. Temporary
employees usually demand half the wages of regular employees but meagre
non-wage benefits in Korea. Similarly, the extension of subcontracting tasks
enables employers to save on labour costs. As a result, employers are tempted to
either make similar downward adjustments in bargaining agreements for wages
and working conditions of regular employees or substitute those employees with
temporary and subcontracted workers. Since regular employees are exclusively
allowed to join enterprise unions in Korea, the rising popularity of temporary
employees and subcontracted employees replacing regular employees damages
the organisational and bargaining capacities of those unions. The growing managerial discretion in massive and individual discharges often unfairly targets
employees who are highly committed to vigorous union activities. Finally, performance-based pay systems undermine the union’s role of proactively leading
wage bargainings while strengthening managerial discretion in judging employees’ performances for wage determination.
96
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OF
I N D U S T R I A L R E L AT I O N S
March 2003
Isolated enterprise bargaining agreements showed generally disappointing
outcomes in relieving employment insecurities. Among 53.4 and 61.9 per cent
of FKTU and KCTU agreements, respectively, that owned regulatory voices in
massive discharges, 54.1 and 33.5 per cent, respectively, specified ‘consultation
with unions’ lacking actual binding forces for unilateral managerial decisions.
Union involvement was also limited in the hiring of temporary employees;
only 2.9 per cent of FKTU agreements and 10.3 per cent of KCTU agreements
specified ‘consultation with unions’. In extending subcontracting tasks, only
14.3 per cent of FKTU agreements and 21.8 per cent of KCTU agreements
owned that weak form of union involvement. In personnel policies on individual
discharge, among 25.7 per cent of FKTU agreements and 63.5 per cent of KCTU
agreements specifying certain forms of union involvement, ‘notification to unions
and individual employees’––weaker than ‘consultation with unions’––prevailed
in 80.9 per cent and 91.9 per cent of those agreements respectively.
In contrast to weak regulatory roles of isolated bargaining agreements, the
coordinated bargainings led by industrial union associations played a crucial role
in checking employment insecurity. The Hospital Union was well known for
achieving coordinated enterprise bargainings to block and regulate managerial
changes in personnel and work organisation policies in 2000. Through its
direct involvement in most bargainings of its affiliated enterprise unions, the
union won numerous enterprise bargaining agreements, including a shift
from temporary to regular employment status for employees after a certain
period of employment, compulsory union consent when hiring temporary
employees, and improvements in wage and working conditions of temporary
employees. As a result, the proportion of temporary employees in unionised
hospitals stayed at about 20 per cent––much lower than the national average.
In addition, many coordinated enterprise bargaining agreements blocked
managerial attempts to adopt a performance-based pay rule (Hospital Union
2001; 291).
Centralised city-level bargaining led by the Auto Transport Union also
partially succeeded in relieving various forms of employment insecurity. In
Incheon, the third largest city in Korea in terms of population, several bus
firms attempted to increase the proportion of temporary employees to 26 per
cent while 1.2 billion won in wages (about 1 million US dollars) was not paid
due to the poor business performances of those firms in 1999 (Auto Transport
Union 2000). Through its bargainings and associated political and social campaigns, the union succeeded in winning back employers’ concessions not to
hire any more temporary employees and solve the problem of unpaid wages.
This agreement generated a bargaining pattern for other cities to follow when
stifling centrifugal managerial attempts to withdraw from centralised bargainings, as was observed in Incheon. By focusing its limited financial and personnel
resources on bargaining led by approximately a third of its affiliated enterprise
unions, the Public Services Union was partially successful in blocking or revising
the government’s plan to save on labour costs by hiring temporary employees or
extending subcontracting tasks in 2000 (Public Services Union 2000).
In contrast, the Metal, Chemical, and Metal Industry unions generally failed
to build effective strategies for coordinated bargainings aimed at defending
KOREAN ENTERPRISE BARGAINING
97
employment security (Chemical Union 2000, Metal Union 2000 & 2001, Metal
Industry Union 2000 & 2001). This does not mean that the enterprise unions
affiliated to those unions always confronted seriously high degrees of employment insecurity. Some enterprise unions in large-sized firms organised by the
Metal Industry Union succeeded in maintaining an independent and militant
stance in their relations with employers and thus showed great bargaining and
strike leverage for resisting or negotiating unilateral managerial decisions. In
contrast, most enterprise unions in small- and medium-sized firms organised by
the Metal and Chemical unions generally owned very weak bargaining capabilities
for defending employment securities, mainly due to the paternalistic corporate
culture and strong managerial resistance to vigorous union activities, that were
salient in those firms (Jeong 1995). The average size of the bargaining unit in
the enterprise unions of the Metal Industry Union was 1355 employees in contrast to 212 in the Metal Union and 151 in the Chemical Union in 2000 (Chemical
Union 2000: 117, Metal Union 2000: 126, Metal Industry Union 2000: 36).
Therefore, besides the degree of coordination in bargainings, the bargaining leverages of individual unions were also influential when determining whether or
not employment insecurities were regulated effectively. However, despite these
discrepancies, isolated enterprise bargainings were generally less effective in
ensuring employment securities than coordinated bargainings.
ANALYSIS
The distinct outcome of isolated and coordinated bargainings in protecting
employment security may be attributed to their distinct structural, functional and
strategic features. Above all, employers could easily weaken the independent and
militant stance of unions in isolated enterprise bargainings (Jeong 1995 & 1999).
Enterprise unions are very familiar with current levels of and prospects for
corporate performances, while employers usually paid wages to their full-time
leaders in Korea even after the recent legal amendment to prohibit payment.
As a result, those unions are consistently exposed to managerial persuasion and
pressure, which usually calls for moderate bargaining demands by urging
unions to seriously consider their impact on corporate performance. Employers
are also in a structurally advantageous position to instil a strong corporate
culture and persuade employees that they ride in the same boat. Finally, since
union leaders and their members are employees in enterprise union structure,
their solidarity and determined actions in enterprise bargainings are vulnerable
to employers’ unfair treatment in wage determination, promotion and transfer.
The inherent structural weakness of isolated enterprise bargaining is particularly
serious in small- and medium-sized firms organised by the Chemical and Metal
unions.
In contrast, coordinated bargainings could maintain some degree of structural
independence from employers’ influence. Bargaining stances of unions in both
coordinated enterprise and centralised city-level bargaining neither has to be
highly sensitive to fluctuating corporate performances nor be vulnerable to
employers’ unfair personnel policies. They also usually possess powerful organisational and bargaining influences, originating from large-sized industrial union
associations that covered all employees in one industry.
98
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OF
I N D U S T R I A L R E L AT I O N S
March 2003
In addition, isolated enterprise bargainings possess limited function in maximising their bargaining leverage. Those bargainings usually operate on the functional principle that they deal with subsequent impacts on labour at bottom the
workplace level emerging after the implementation of employers’ policies rather
than intervening in making decisions at the strategic, firm level. For example,
those bargainings were usually concerned with negotiating changes in wages and
work organisations rather than shifts in product and marketing policies generating those changes. The limited vertical, functional coverage of bargaining issues
inside firms caused unions to miss the chance to proactively negotiate and adjust
several strategic decisions in advance.
At the same time, isolated enterprise bargaining usually adheres to an
exclusive bargaining strategy for dealing with the firm-specific concerns of
employees of one firm while exhibiting lukewarm, selfish, and myopic responses
for similar concerns of other firms. For example, an enterprise bargaining for
improving wages and working conditions in one firm does not need to address
the concerns of employees in other firms facing serious threats to job and income
securities. The narrow horizontal coverage of bargaining issues confined to
one firm fails to generate formidable pressures on employers by pursuing the
strategy of coordinating bargaining demands and timing beyond enterprise
levels. Its limitation is particularly serious for enterprise unions in small- and
medium-sized firms because isolated enterprise bargainings in those firms do
not usually have self-sufficient capabilities to enable them to effectively regulate
managerial attempts generating employment insecurities. It explains why
69 per cent of 129 sample enterprise unions in a survey of the Metal Union
organising mainly small-and medium-sized firms prefer to build coordinated
bargainings at national, industrial, and regional levels rather than maintaining
the current isolated enterprise bargaining structure (Metal Union 2000: 234).
In contrast, some industrial union associations responsible for coordinated
bargainings could generate formidable pressure on employers at the decisionmaking stage through the use of political and social campaigns. Since the outcomes of coordinated bargainings, led by the Hospital, Auto Transport and Public
Services unions, have crucial impact on the provision of their services, the
relevant government agencies and employers could not always ignore the
Unions’ demands for consultation and negotiation in the stage. These Unions
can also impose great pressure on individual employers to admit their influence
by uniting and maximising the organisational and bargaining leverages of
numerous enterprise unions through a common bargaining strategy in terms
of demands and timing.
Besides the comprehensive vertical, functional coverage of coordinated
bargainings, those bargainings are also helpful in pursuing the inclusive bargaining
strategy concerned with broad employees’ interests beyond enterprise levels. This
strategic feature of coordinated bargainings corresponds with its structural
feature, monopolistic and inclusive status in employee representation in one
industry and region. The broad, horizontal coverage of bargaining issues is
achieved by adopting popular strategic menus, such as social campaigns, political consultation and negotiation and coordination of enterprise bargainings.
For example, in its use of social campaigns aimed at shaping public opinion, one
KOREAN ENTERPRISE BARGAINING
99
rationale of the Hospital Union to justify its opposition against the discharges
of regular employees and growth of temporary employees numbers faced by
numerous hospitals was that those changes would ultimately endanger public
health due to low morale and poor service qualities.
CONCLUSION
This study finds that isolated enterprise bargainings, compared with coordinated
bargaining, are inherently limited in ensuring employment securities due to their
structural dependence, limited vertical, functional coverage and narrow, horizontal
strategic coverage of bargaining issues. This finding generates some interesting
research agendas, which call for further comparative industrial relations studies.
Due to the relatively short history of isolated enterprise bargainings in comparison
with industrial and craft ones in capitalistic nations, the Korean case can provide
a valuable contribution to the current limited understanding of the subject. The
inherent weaknesses of isolated enterprise bargainings in Korea during the
employer-led enterprise restructuring of the 1990s contrasts with the prevailing
positive and stereotypical evaluation of those bargainings in the improvement of
both business performance and material rewards for employees during the rapid
economic growth of the 1970s and 1980s in Japan. These opposing evaluations
may be the result of not only different stages of growth of enterprise unions in
terms of economic growth stages and institutional stability between the two
nations (Jeong 1995), but also from different evaluation criteria, defending
employment security in this study and primary attention to the impacts of
enterprise bargainings on economic performance in previous Japanese studies.
In order to build a coherent set of theories considering various forms of
enterprise bargainings in diverse national contexts, further comparative
studies are required to consider the experiences of newly industrialising and
industrialised nations, transitional countries, and even advanced nations that
have recently experienced a proliferation of those bargainings resulting from
the dissolution of several centralised bargainings at regional and industrial
levels.
The Korean case may also be accepted as evidence in support of a general
theoretical hypothesis for inferior performances of isolated enterprise bargainings in ensuring employment securities––commonly observed in many advanced
nations. Several studies on Japanese isolated enterprise bargainings have questioned the existence of bona fide bargaining power due to their weak structural
and functional independence from management (Benson 1998), their inherent
submissiveness to management control (Galenson 1976), and inherent limitations
in internal union democracy (Seifert 1988). In the US, a similar question was
raised on isolated enterprise bargainings during the 1920s and 1930s (Jacoby
1983). In addition, isolated enterprise bargainings in Japan and the US respectively showed the limited vertical, functional coverage of bargaining issues by
weakly regulating strategic decision making for both enterprise restructuring
(Deutschmann 1987, Marsh 1992) and employee participatory programs at workplace levels (Parker and Slaughter 1988). Finally, isolated enterprise bargainings
in Japan revealed the narrow, horizontal strategic coverage of bargaining issues
by placing low priority on checking and reversing union decline in the industry
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and nation as a whole (Tsuru and Rebitzer 1995). Given the recent trend of
rapid decline of union density in the US and UK, new strategies combining
coordinated bargainings, political struggles, social campaigns and networking
organisation encompassing unionism at regional, community, and national
levels radically departing from conventional isolated enterprise and workplace
bargaining models, are considered as being able to reverse the trend
(Bronfenbrenner et al. 1998; Heery 1998).
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