South Korea parliament plans labour law reforms

President Lee Myung-bak and his conservative ruling Grand National Party (GNP) have proposed a raft of reforms they say are needed to steer the export-driven economy through the global economic downturn, but have seen measures delayed in previous sessions due to demonstrations and scuffles among MPs.

South Korea lost 169,000 jobs in the first five months of this year -- the biggest loss since the Asian financial crisis a decade ago -- and further losses would chill prospects for recovery and deal a blow to Lee, who has seen his support rate fall in recent months.

"If the labour law is not passed, more than 1 million employees will lose their jobs. This is a political bombshell," said a senior GNP member. Union leaders said the number of job losses would be far less.

South Korea will face massive job losses when the current law on temporary workers expires on July 1. Under the law, firms can hire contract workers for up to two years and then must decide whether to make them permanent employees or release them.

GREATER FLEXIBILITY

The GNP, with a majority in the National Assembly, hopes to double the term to four years. This would give companies more flexibility during uncertain times and mean contract workers may have more chance of being retained for longer.

Debate on the bill is expected for next week with analysts saying they expect some sort of temporary compromise that revises the current measure to allow employers to keep contract workers on their payrolls a bit longer, perhaps up to three years.

Economists said employers in South Korea are worried about taking on permanent labour because of the high costs and difficulties in laying them off, and have been pressing for ways to expand the temporary workforce.

MPs from the opposition Democratic Party, who have staged a sit-in protest in an attempt to physically block parliament from meeting, oppose the law because they say it will make prospects for job security and decent wages far more difficult for an increasing segment of the workforce.