The city of Seoul enacted the ordinance on the operation of Seoul Metropolitan City Worker Director Representation in 2016, becoming the first to introduce the labor director system in a public organization. The newly elected administration also included in its agenda the introduction of the labor director system, which reflects the rising interest in workers'participation in management. However, there are still many obstacles to tackle before the system takes root and spread to the private sector. At this point when South Korea took its first step toward workers'participation in management through the introduction of labor director system in a public organization, it is necessary and meaningful to research on the need for institutional improvement for the practice and the ways for its effective implementation.
Rapidly changing technologies and the economic globalization based on these changes heighten the competitive business environment. Especially, expected to bring about revolutionary changes throughout the whole human society and production systems through the 4th industrial revolution, digitalization exerts a great deal of influence on business and labor, commanding a change in the management system. Meanwhile, amid these changes, South Korean companies are clinging to the old practices of workforce reduction or restructuring, turning away from corporate social responsibility and contributing to job insecurity. So, one of what's first needed for the country to come out of the lengthening low development is economic democratization. The principle of social state manifest in the country's constitution is that not only the political democracy but also the economic democracy should be realized, and the exercise of property rights should sometimes be restricted for the good of the public. In that sense, workers'active participation in management can be the first step in settling industrial democracy in the country. But labor unions alone cannot realize it when it has been weakened in its power to check the management through the past administration's pro-business policies. Thus rise the need to introduce a new institution other than labor unions that could let workers have a clear say in the process of management decision-making.
Meanwhile, participation in decision-making could also be divided into 'weak participation'and 'strong participation'models in terms of the strength of participation measures. The German system of workers'participation in management is regarded as a paragon of a well-functioning strong participation model. A strong participation model is characterized by strict separation between collective bargaining and workers'participation in management, acknowledgment of rights to codetermination at the workplace level, etc. The German codetermination system is said to have contributed to the realization of transparent management and the buildup of mutual trust between labor and management by guaranteeing workers'participation in management. It is also regarded to be exerting positive influences on companies'adapting to rapid changes in the business environment in today's intensely competitive global market. Meanwhile, workers'participation in management in South Korea is based on a weak participation model, which is characterized by vague boundaries between collective bargaining and participation in management, disacknowledgement of rights to codetermination at the workplace level, etc. Thus, the South Korean system of labor-management council is too much restrictive of worker representatives'decision-making rights in law and makes a vague division between the objects of consultation and decision, consequently seen as failing to function effectively. Another related problem is the widespread distorted corporate governance system by which an owner's family wields the absolute power on management with only a fraction of shares. So, there are many cases where a system of workers'participation in management is only nominal and insubstantial, thus exerting little influence even in times of corporate restructuring.
This study examined South Korea's institution of workers participation in management, which takes the form of the labor-management council, employee stock ownership plan, and the committee on occupational safety and health. We looked at the path workers'participation in management has taken in its development according to the Act on Promotion of Worker Participation and Cooperation, and identified the socio-economic conditions and contexts which excluded workers'rights to decision making in management.
First, the institution of a labor-management council, which is required in workplaces with 30 or more employees, was often neglected, and those in place did not have practical functions. Companies with labor unions had higher rates of instituting labor-management councils at the workplace level than those without labor unions. Whether or not a labor-management council was representing the whole employees also differed according to the presence or absence of a labor union. Workers at companies that do not have a labor union and workers at smaller companies gave more negative answers to the question. The requirement of report, consultation and resolution involving the labor-management council, stipulated in the law, was rarely kept. Our Company Stock Plan, the employee stock ownership plan of the country, was designed to limit workers'participation in management and only contribute to forming property rights. The Committee on Occupational Safety and Health was responding proactively to the matters of improving the conditions at individual workplaces, which, however, was also only a function of responding to the demands of the workers, irrelevant to the matter of workers'participation in management.
The above observations point to the need to overhaul the system of workers'participation in management in South Korea so that workers can practically realize participation in management decision-making. For a practicable institution of participation in management to settle, the institution should be compatible with social contexts and conditions. We find the German example, which has the codetermination system that works best, merits analyses to draw implications for improving the South Korean system. As reasons for the lack of workers'participation in management in South Korea, we are going to examine employers'monopoly over property rights and management rights, very restrictive stipulations in the law of matters of joint decision, and the relation it has with labor unions.
The employers'argument against workers'participation in management that it's infringement of the employers'property rights and management rights is controversial. There is currently no specific legal grounds for the concept of management rights in the country while Supreme Court cases just explain they are basic rights governing freedom of decision making in management, provided for by the Constitution. Such court cases maintain that request for collective bargaining is not allowable on matters of management. It's that the court is quoting the employers'argument for their management rights. However, the concept of social state and the guarantee of the fundamental labor rights in the Constitution provide grounds for workers'active participation in management. Similar controversies surrounded the enactment of codetermination law in Germany in 1970. So, this study examined the course of discussions on the institution of codetermination among the stakeholders of the labor and management and scholars, and the grounds for finally adopting the institution. We closely studied the sides'arguments - one on infringement of employers'property rights from those who were against codetermination, and the other on the restriction of individual's property rights for the good of the public from those who were for determination. And then we compared them with the Constitution of South Korea to draw implications. We also analyzed the principles and ranges of workers'rights of joint decision-making, refusal of consent, objection, information, and consultation on matters of management, which are stipulated in great detail in the German law, and looked at the practical effects of such provisions. We then compared these German provisions to the rights of agreement, consultation, and information stipulated in the Act on Promotion of Worker Participation and Cooperation of South Korea. Lastly, we examined the cases of the Hans-Böckler-Foundation, which contributed greatly to the settlement of the institution of codetermination in Germany and shows the mutually-complementary relationship between the German Trade Union Federation and Works Council, to reflect on the role of labor unions in South Korea for workers'participation in management to be successfully institutionalized in the country.