Labour market reforms and polarization in Korea

From the early 1990s the South Korean government launched a series of structural reforms to liberalize and deregulate the economy and labour market, in line with its globalization strategy. Particularly after the financial crisis, flexible labour market reform was one of the major initiatives to keep the Korean economy competitive in the global market. This paper describes the rationale for flexible labour market reforms in Korea from the early 1990s, evaluates their impacts on labour market polarization, and assesses the policy responses adopted by Kim Dae-jung and the current Roh Moo-hyun governments. It is argued that the flexible labour market reform is rather limited in its scale, due to strong opposition from unions and employees for different reasons, and the burden is disproportionately shouldered by the non-standard workers. As a result, a dual and segmented dual labour market has been formed. Greater protection to the non-standard workers is required to remedy the situation, considering that such reforms are necessary for Korea’s economy in the future