Date of publication: July 23, 2009

Source: New York Times

By CHOE SANG-HUN

SEOSAN, SOUTH KOREA — Kim Joo-won was making about $3 an hour when he lost his minimum-wage job assembling cars in March. But every day, he is back at the gate of Donghee Auto, dressed in his white factory uniform.

He and several other temporary workers who were also fired greet managers and workers going to work or coming off the night shift, shouting, “We want our jobs back!”

He still has his uniform, he says, because the day he was let go, he chained himself to a factory column in protest. Company guards cut the chain, hauled him away and threw him out the back gate kicking and screaming — “without even giving me time to change clothes.”

“They treat us nonregular workers like used toilet paper,” he said.

In South Korea, a country famous for protest rallies, workers picketing a factory gate are not making an unusual scene. But Mr. Kim and his colleagues represent a new workers’ grievance: the growing gulf between contract employees’ pay, benefits and protections and those of permanent staff workers. The issue has become so charged that it has led to a prolonged sit-in in Parliament.

South Korean workers used to join a company expecting lifetime employment. But after the Asian financial crisis in the late 1990s, businesses began using temps, who work full time but on short-term contracts. They earn less and are easier to fire. Such a trend can also be seen other parts of the world that have rigid labor markets, especially in Europe.

The number of contract workers in South Korea is estimated by the government at 5.4 million, or 33 percent of the country’s wage earners. As of March, a typical nonregular worker earned 1.2 million won, or $960, a month — 60 percent of the average wage of regular workers.

Unlike their regular counterparts, whose pay goes up according to seniority along a tenure track, they start at the bottom of the wage scale and remain there. They receive fewer health care benefits and less unemployment insurance, and they rarely have the shield of a union.

As South Korea struggles with the global economic downturn, temporary workers are bearing the brunt of corporate cost-cutting. The number of unemployed people increased by 25.6 percent in June to 960,000, and many of those laid off were contract workers.

Temps typically have smaller nest eggs than regular workers, so as more of them end up unemployed, social problems seem to rise faster. In Seoul, subway commuters cringe at a relatively new scene: homeless people lining up at soup kitchens or sleeping in paper boxes.

Under South Korean labor law, to fire a regular worker, a company must prove that it has an “urgent” management crisis and that it has done everything it can to avoid shedding workers. It must notify the union 50 days in advance of the layoffs and engage in talks on how to avert them. Unions often respond with strikes.

“Nonregulars are hired as a buffer” for managers who need freedom to adjust their work force but abhor clashes with unions, said Kwon Hyuk-cheol, an economist at the Center for Free Enterprise, a private research institution in Seoul.

But temporary workers are also a buffer for unions, because a union’s primary concern is to protect its members, and most union members are permanent workers, he said. Contract positions “are created because it is so difficult to lay off regular workers here.”

Only 3.4 percent of nonregular workers are union members, while 17.4 percent of regular workers join unions.

As the grievances of contract workers deepened, the National Assembly passed a law in mid-2007 aimed at protecting temporary workers. It requires employers to add any temporary worker who has been on the job for more than two years to the permanent work force.

Since July 1, businesses have faced a choice: Dismiss temps who are nearing the two-year limit or elevate them to regular status. In the business slump, many companies are letting temps go.

“It was supposed to protect nonregulars,” said Park Heong-joon, President Lee Myung-bak’s senior secretary for public affairs. “But the law has become a convenient excuse to lay off workers.”

The government insists that unless the law is suspended, as many as one million temps will lose their jobs in the coming year. But the opposition is staging a parliamentary sit-in to block the governing party from passing legislation to that effect. It says the government is exaggerating the crisis, and it wants to redirect billions of dollars from economic bailout packages to subsidize and encourage companies to transfer their temps into their regular work forces.

Management, unions and temps all hate the law, for different reasons.

The Federation of Korean Industries and employer groups want the two-year rule to be abolished to give them more leeway to use contract workers.

Unions, meanwhile, say the law only encourages businesses to hire temps.

“This law is not about protecting nonregulars but about institutionalizing and mass-producing them,” said Lee Eung-doo, an official at the Korean Confederation of Trade Unions. “As long as it exists, why would a company hire expensive regular workers when they can easily hire and fire cheap temps?”

Temps themselves want Parliament to abolish the law and put strict restrictions on hiring temps.

President Lee, a former Hyundai chief executive, says he will reduce the wage gap between regular workers and temporary employees. But he maintains that for global competition, South Korean companies must have greater “labor flexibility” in firing workers.

The conflicting demands are coming to a head at places like Donghee Auto.

Donghee has been assembling Kia Motors’ supermini Morning cars since 2004 at a factory owned by Hyundai-Kia . Yet it hires none of its 900 assembly line workers. It farms out its lines to 16 staffing agencies, who hire workers on one-year contracts.

Such a system makes it extremely difficult for workers to organize a strong union. Donghee workers toil 10 hours a day, six days a week. When some have agitated for unionization, their agency has refused to renew their contracts or Donghee has terminated the agency’s contract, according to former workers.

Park Byong-seon, 28, said that after his agency suddenly closed June 30, a new agency took on most of the workers — but not Mr. Park, who had been warned by his employer not to associate with union organizers. “Those rehired do the same work as yesterday, but they start again with a new contract from the bottom wage,” he said.

Donghee representatives declined to be interviewed for this article, referring all questions to Kia, which owns 35 percent of the company. Kia refused comment, calling Donghee’s labor issue “too sensitive.”

But the Donghee employment model, the first of its kind in the South Korean auto industry, is spreading among manufacturers looking for lower-cost and strike-free plants.

“It’s a factory of dream for managers and a place of despair for workers,” said Lee Cheong-woo, 33, a former Donghee employee.

After his dismissal, Mr. Kim relied on unemployment benefits — $630 a month. But that support ended after three months. He and Mr. Lee share a free room at a friend’s house and continue their campaign to get their jobs back at Donghee, rather than looking for temp work elsewhere. “If I give up, I will drift from one temporary job to another for the rest of my life,” he said. “If you are a nonregular in South Korea, your life is second class. I must change the reality.”