Labor regulation and economic change: a view on the Korean economic crisis

This paper examines the internal structural conditions of the current Korea n economic crisis with a special focus on the issue of labor regulation. Th is paper argues that the Korean economic crisis was structurally conditione d by the internal political processes that resulted in the crisis of labor regulation, which in turn negatively affected the competitiveness and profi tability of Korean industries. From the 1960s to the mid 1980s, repressive and militaristic regulation practices imposed on labor facilitated the inte nsive mobilization of labor and conditioned the rapid economic growth in So uth Korea. In the late 1980s, however, these practices became ineffective i n labor mobilization as a result of democratization and workers' empowermen t. After the repressive system of labor regulation was dismantled, social a ctors. such as the state, business organizations, and labor unions, made di verse efforts to build a new system of labor regulation, which was unsucces sful. This crisis in labor regulation has negatively affected the growth of the Korean economy, and structurally conditioned the 1997 financial crisis . Under specific conditions, such as financial liberalization, the weakenin g of industrial policies, and the financial crisis in Southeast Asia, this crisis resulted in the financial turmoil in 1997. (C) 2001 Elsevier Science Ltd. All rights reserved.