Labor Standards in East Asia Civil Society Forum between South Korea - PowerPoint PPT Presentation

How to Implement CSR and Raise Labor Standards in East Asia Civil Society Forum between South Korea and EU 9 th December 2014, Brussel Dr Kiu Sik Bae (Senior Research Fellow, Korean Labor Institute)

Contents 1. Introduction to the Korean Economy and Employment 2. International Division of Labor among East Asian Countries 3. OECD Guidelines for MNCs and CSR 4. Degree of OECD guidelines and CSR at MNCs and their suppliers in East Asian countries 5. How to implement OECD guidelines and keep basic labor standards in those countries 6. How to cooperate each other

Basic Questions to be Asked for This Forum - For what purpose this forum is run? • To increase the awareness of social dimensions(labor and environmental issues) to balance economic liberalization after the FTA • To build and strengthen the social activities such as OECD MNCs guidelines, CSR and SRI to enhance basic rights/living standards and well-being of workers and society in general - How to achieve this? • To cooperate each other in these activities between South Korea and EU at the level of civil society(Domestic Advisory Group) • To ask MNCs of South Korea and Europe to implement OECD guidelines, 10 principles of UN Global Compact, CSR and other related norms • To help rapidly industrializing East Asian countries keep minimum labor standards and increase their awareness of social issues • Through helping them develop union or social movement as well as various activities such as audits, CSR, and campaigns - How to Approach this?

Economic Growth of Korea Real GDP growth rates of Korea(%) 12 10,7 10 8,8 8 7,2 6,3 6 5,8 5,2 5,1 4,6 4 4 4,0 3,6 2,8 ◇ 2.8 2,3 2 2,0 global Financial Crisis 0,3 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -2 -4 1998 Financial Crisis -5,7 -6 -8 4

Annual Working Hours and Real Annual Average Wages ‌ Annual working hours/worker Annual Average Wages (PPPs in US Dollars ‌ ) ‌ ‌ ‌ ‌ 2000 ‌ ‌ 2010 ‌ ‌ 2000 ‌ ‌ 2009 ‌ 2010 ‌ ‌ 2013 2013 1,676 Australia 1,780 1,686 38,258 41,856 42,550 50,499 ‌ 1,545 1,551 1,570 41,585 43,561 43,023 48,082 Belgium ‌ Canada 1,775 1,702 1,706 35,698 41,517 41,961 46,911 ‌ 1,411 Denmark 1,581 1,542 37,010 42,904 43,190 48,347 ‌ 1,591 1,562 1,489 34,194 37,807 38,124 40,242 France ‌ 1,473 1,419 1,388 37,695 38,251 38,325 43,682 Germany ‌ 1,752 Italy 1,861 1,778 31,920 32,406 32,657 34,561 ‌ 1,735 Japan 1,821 1,733 33,133 33,219 33,900 35,405 ‌ 2 , 512 2 , 193 2,163 (2012) 26 , 870 31 , 733 33 , 221 Korea 36,354 ‌ Netherlands 1,435 1,377 1,380 41,541 45,832 45,671 47,590 ‌ 1,665 Spain 1,731 1,663 31,720 33,908 33,656 34,824 ‌ 1,642 1,624 1,607 31,828 36,766 36,826 40,818 Sweden ‌ 1,688 1,632 1,585 45,276 50,155 49,810 54,236 Switzerland ‌ UK 1,700 1,647 1,669 40,541 44,899 44,008 41,192 ‌ 1,788 USA 1,836 1,778 49,981 52,256 52,607 56,340 ‌ 1,818 1,749 1,770 .. .. 43,933 43,772 OECD ‌ Note: OECD weighted average. - 33 - Source: Statistics in year 2000, 2010 from OECD database, Statistics in year 2013 from OECD Employment Outlook 2014

Economic Crisis and Employment in Korea - Relatively small shock of 2008 financial crisis - Previous experience of the financial crisis in 1997 1) tight financial regulation and lending 2) companies having undergone drastic restructuring in late 1990 to be prepared for the rainy days 3) firms already slim down - China Effects – fast growing economy – relocation of industry to China + industrial upgrading at the same time - Deepened international division of labor/close trade relations among East Asia/production value chains with China - The special status of Korean economy with China arising from many Korean invested firms in China and trade with China - Korean economy highly dependent on export - A small no of prosperous competitive big firms versus majority of struggling SMEs - Jobless growth especially among big firms 6

Unemployment Rates and Youth Unemployment Rates in Korea 6,0 Unemployment Rate since 2000 5,0 5,1 5,1 4,0 4,3 4,1 4,1 4,0 4,0 3,9 3,9 3,8 3,7 3,7 3,0 3,5 3,5 3,4 2,0 1,0 0,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: National Statistical Office. Economically Active Population Survey, each year. 20~24 years old Korea USA Japan Germany France UK Sweden Unemployment rates 3.1 8.0 4.3 5.3 10.1 7.5 7.8 Youth unemployment rates 8.5 14.7 7.1 7.4 23.7 17.9 22.3 Source: OECD. 2014. OECD Employment Outlook 2013, Table D. p 247 7

The Rates of Wage Increase since 1980 30 nominal wage increase real wage increase 23,4 25 21,1 20,7 18,8 20 17,5 15,8 15,5 15,2 15 12,7 12,2 12,1 11,9 11,6 11,2 11 14,5 10,1 9,4 8,7 9,2 10 8,2 8 11,1 7 6,5 6,4 5,6 5,9 6,5 5,6 9,5 5,1 8,6 7,5 8,4 8,1 7,4 4,1 7,8 3,7 5 7 6,1 6,4 6,7 6,4 6,7 6,8 2,1 5,7 5,6 5,3 2,8 3,6 3,3 3,3 3,4 -0,6 3,3 2,5 2,4 0 -2,5 1,5 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -0,5 -0,5 -0,7 -5 -4,2 -4,4 -10 -9,3 -15 Source: The Ministry of Employment and Labor, Establishment Workforce Survey Report, each year.

Employment and labor markets in Korea - Very low rate of unemployment - Relatively high rate of youth unemployment because of high rate of college registration – mismatch between jobs available and the young seeking jobs - Low rate of employment especially women - Increasing participation of women in labor markets - The tertiarization of the employment following the expansion of the service sector Dualization/Polarization of labor markets in Korea - Major challenges to Korean labor markets - Few quality jobs at large firms and public sector vs. many low quality jobs at SMEs/service sector - Big gaps in wages/welfare/conditions between large and SMEs - High proportion of non-standard employment - Big differences in wages, working conditions and social insurance coverage between permanent and nonstandard employment 9

Export from Korea Import to Korea Unit ： MM dollars 、％ Unit ： MM dollars 、％ 2008 2010 2012 2008 2010 2012 Amount Amount ratio Amount ratio Amount Amount ratio Amount ratio Asia 214,051 247,650 53.1 318,235 58.1 Asia 199,784 45.8 221,793 42.7 Japan 28,252 28,176 6.0 38,796 7.1 Japan 60,956 64,296 15.1 64,363 12.4 China 91,389 116,838 25.1 134,323 24.5 China 76,930 71,574 16.8 80,785 15.5 Hong Kong 19,772 25,294 5.4 32,606 6.0 Hong Kong 2,223 1,946 0.5 2,058 0.4 Taiwan 11,462 14,830 3.2 14,815 2.7 Taiwan 10,643 13,647 3.0 14,012 2.7 Viet Nam 7,805 9,652 2.4 15,946 2.9 Australia 17,846 20,410 4.8 22,988 4.4 ASEAN 49,283 53,200 10.9 79,145 14.4 Viet Nam 2,037 3,331 1.0 5,719 1.1 India 8,977 ASEAN 40,917 44,099 10.1 51,977 10.0 11,435 2.5 11,922 2.2 USA USA 46,377 49,816 10.4 58,525 10.7 38,365 40,403 9.5 43,341 8.3 Europe 76,697 67,215 14.4 68,300 12.5 Europe 53,697 55,760 13.1 71,323 13.7 Germany 10,523 10,702 2.3 7,510 1.37 Germany 14,769 14,305 3.36 17,645 3.40 Middle East 26,647 28,369 6.1 36,616 6.7 Middle East 101,645 80,815 19.0 127,768 24.6 L. America 33,267 36,187 7.8 36,747 6.7 L. America 13,756 14,645 3.4 19,723 3.8 Total(FOB) 422,007 466,384 100.0 547,870 100.0 Total(CIF) 435,275 425.212 100.0 519,584 100.0 Source: Korea Trade Association. 2013 - In 2012 Trade Surplus from trade originates from China(+ Hong Kong) by 84.1 bn, from ASEAN 27.2 bn, from L. America 17bn, from USA 15.2bn, from East Europe 10,3bn - In 2012 Trade Deficits originates from Middle East 91.2 bn, from Japan 25.6 bn), from Australia 13.7 bn - The Ratio export to China out of total Korean Export is around 30.5%, to Asia 58.0%

Changes in Intermediate goods trade in East Asia between 2000 and 2012 Year 2000 Year 2012 Source: Compiled with UN Comtrade data BEC Classification 22, 42, 53.

Intra-regional Exports by Commodity in East Asia

Composition of Trade in the Major Regions (2010)

International division of labor in East Asia and intra-increase of regional trade ratio East Asia Trends in the ratio of regional trade Asia ) Note: For Asia, Korea, Japan, China, India, Australia, New Zealand Source:

Characteristics of Trade among East Asian Countries • In East Asia, the proportion of intermediate goods in trade has been higher than in other regions but that of consumer goods in trade has been lower than in other regions • East Asian trade among Korea-China-Japan is centered on intermediate goods and those goods are manufactured in Korea, China or Japan and finally assembled in China and then exported to USA, EU countries – Triangle Trade Structure • The dependency of its neighboring countries on China becomes deepened especially in electric and electronic industries through Triangle Trade • Apart from electric and electronic industries, Chinese contents in export goods have been higher than before • Because of the economic crisis in USA and Europe after year 2008 and onwards, the triangle trade structure is not sustainable. • The need to transform triangle trade structure into one of regional production/ consumption in the future is being raised.