[Korea] Call for labour law overhaul to attract foreign investment

President Moon Jae-in and his administration have been called upon to overhaul labour laws in an attempt to attract foreign investors, The Korea Times reports.

The recommendation came from international lawyer Jeffrey Jones, chairman of the board of governors of the American Chamber of Commerce (AMCHAM). Mr Jones said changes to labour rules would encourage the creation of new jobs alongside increasing foreign investment.

Mr Jones said that President Moon’s priority should be revisions to labour law regulations. To give foreign companies more flexibility in hiring and firing employees, "In Korea, the law prohibits laying off employees without justifiable cause and it is extremely difficult to make a case for this." He continued, "The modification of the labour standard act is necessary.”

The AMCHAM board chairman made the comments following President Moon's town hall meeting, at Cheong Wa Dae, with executives from companies with foreign investors. The meeting was reportedly the first of its kind since May 2017 when the president took office. Mr Jones was its moderator.

Chief executives of Heineken, City Bank Korea, Pfizer Korea, United Air, BNP Paribas and IKEA Korea, were among the 65 foreign business leaders at the meeting. Cheong Wa Dae arranged the town hall to address difficulties faced by foreign companies trading in Korea.

Foreign-invested businesses represent 19 per cent of exports and 7 per cent of employment for the country. Increasing flexibility for layoffs has been a key demand for these businesses. Mr Jones said, "This would have a huge impact on the job market," citing the flexibility of Singapore and the US in these matters and their appeal to foreign companies.

Foreign investment reached $27billion ($2.37million) in 2018, a record high and a growth of 17.2 per cent. Some observers attribute the rise to the easing of tensions between South and North Korea. However, there are still barriers to remove.

"To facilitate more investment, the government needs to free up the regulatory environment," Mr Jones explained. "Korea is competing with countries around the world for investment. Improving how foreign businesspeople feel about their businesses here will make them the best ambassadors for Korea."