Korea realistic in changing labour laws

From Professor Jeffrey D. Sachs.

Sir, Contrary to your leader "Korea on trial" (January 22) criticising South Korea's new labour laws, I would suggest that there is something unseemly in the OECD apparently trying to dictate the specifics of labour legislation to South Korea. To be sure, the Korean government has botched up the process of labour law change. It could have done better. At the same time, however, the specific pressures that seem to be emanating from the OECD have been at best unhelpful and most likely quite misguided.

Many of the OECD countries, especially in Europe, have made a mess of their own labour practices. After all, it is OECD-Europe, not South Korea, that boasts unemployment rates consistently above 10 per cent of the labour force, while South Korea has managed to keep unemployment rates below 3 per cent. It is Europe - through excessive minimum wage standards, overly-protective job security, coddled national trade unions such as IG Metall in Germany, and bloated social charges - that has priced its labour out of the international markets.

The Korean government's much-vilified action of strengthening management flexibility to dismiss workers when economic conditions merit is a realistic response to the global economy that Europe would be wise to pursue as well. Moreover, the several-year delay in introducing multiple unionism in Korea seems plausible given the risks involved.

The international community has all the right to insist on good international practices from other countries, especially open trade. It has the right to insist on core human rights. But there is little wisdom in insisting that other countries should emulate failed policies in labour relations that are neither justified in theory nor merited on the basis of Europe's own experience.

Jeffrey D. Sachs, director, Harvard Institute for International Development, 1 Eliot Street, Cambridge, Massachusetts 02138, US Copyright Financial Times Limited 1997. All Rights Reserved.