Public Institutions' Non-Regular Worker Treatment Improvement Faces Financial Burden Concerns

As the government prepares to announce measures this month to improve the treatment of non-regular workers in the public sector, the resulting financial burden on public institutions is emerging as a major issue. The Ministry of Employment and Labor announced the 'Improvement Measures for Outsourcing Operations in the Public Sector' on the 16th. The plan aims to improve outsourcing operational methods in public institutions to resolve treatment disparities and gaps within the labor market, acting as a 'model employer'. The core of the improvement measures includes restrictions on subcontracts, an increase in the minimum bid rate, and the establishment of outsourcing contracts for two years or more. Minister of Employment and Labor Kim Young-hoon spoke about these improvement measures at the Ministerial Meeting on Labor Safety held at the Government Complex Seoul in Jongno-gu, Seoul, on the same day. Based on the reality that wages decrease as subcontracting tiers increase, the measures aim to narrow the wage gap by restricting subcontracting. A survey by the Ministry of Labor last year found cases where workers at ordering institutions received around 3.5 million won per month, while those under direct contracts earned 2.9 million to 3.1 million won, and those under subcontracts received just over 2 million won.

To prevent evasion of severance pay and similar issues, the government will encourage setting outsourcing contract periods of two years or more, and concluding employment contracts for the same duration. The survey revealed instances of contracts lasting '11 months and 29 days' to avoid severance pay obligations. While 51.3% of direct contracts were concluded annually, 29.4% of subcontracts were for one year, and 35.3% were for less than one year. There were no separate budget estimates for the implementation of the improvement measures, but an increase in the minimum bid rate for general services and the setting of contract periods of two years or more could lead to increased labor costs. The Ministry of Labor stated that presenting principles for outsourcing operations in the public sector is a step towards improving the working environment for contracted workers. Professor Park Ji-soon of Korea University School of Law commented, 'The policies being introduced could lead to absolute cost increases and exacerbate distortions in the labor markets between the public and private sectors.' He added, 'Public persuasion is needed on how to enhance the efficiency of the public sector in return for wage increases.'