S. Korea fails to pass labor reform law; mass job losses feared

It also sent an already embattled parliament into deeper turmoil, likely delaying votes on a free trade agreement with the United States and a raft of pro-business reforms President Lee Myung-bak has proposed to steer the export-driven economy through the global economic downturn.

“When we look at the data, about 800,000 people will be unemployed within a year,” ruling Grand National Party (GNP) member and a ranking member of the parliament labor committee Cho Won-jin said on MBC radio on Wednesday.

Economists said job losses would be significant but probably not as large as the conservative GNP predicted.

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 and his GNP, both of whom have seen their support rates fall in recent months.

The GNP could not work out a deal with the opposition Democratic Party to revise the current law on contract workers that requires employers to either hire them as permanent employees or fire them after two years. The GNP, with a majority in the National Assembly, wanted to double the term to four years, giving companies more flexibility during uncertain times.

It meant contract workers may have more chance of being retained for longer.

Economists said employers in South Korea are worried about taking on permanent labor because of the high costs and difficulties in laying them off, and have been pressing for ways to expand the temporary workforce. The Democrats have been pressing for changes to the law that would increase permanent employment and job security.

The GNP could use its majority to railroad through a bill but risks a backlash if it is seen as ignoring the opposition's concerns.

Opposition MPs have staged sit-in protests in front of the main assembly chamber to block the session and boycotted all committee meetings this week.

Democratic floor leader Lee Kang-rae ruled out further negotiations on the labor bill and also on the government's sweeping media reform plan unless the GNP changed course.

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