The Myth of Free Labour Market in Korea

The paper challenges the conventional view that a free labour market has played a crucial role in producing good growth and equity performance in Korea. The paper first shows that this view is based on problematic models of growth and equity, and that it is not supported by the empirical evidence from Korea even in its own terms. Then we discuss the conceptual problems with the notion of ‘free labour market’. It is pointed out that, without explicit moral judgement concerning the underlying system of rights, it is not possible to maintain a coherent notion of ‘free labour market’. It is then shown that, contrary to the conventional wisdom, the Korean labour market has been heavily regulated, with the state taking an active role in the management of conflict and in the promotion of learning. We show that the Korean state has tried to manage conflict in the labour market through a combination of political repression, appeasement and mobilisation and has tried to promote skill formation and learning through manpower planning, subsidies to education, and various training and retraining schemes. It is argued that, while by no means unambiguous successes, such state involvements in the labour market have been critical in the industrial success of Korea.1