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Institutional legacy of state corporatism in de-industrial labour markets: A comparative study of Japan, South Korea and Taiwan

 

 

 

 

by Prof. Sophia Seung-yoon Lee  ( sophia.sy.lee@ewha.ac.kr)

Department of Social Welfare 

 

 

 

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Abstract
De-industrialization has created new economic environments for Japan, South Korea and Taiwan. While structural changes in the labour market took place rather rapidly, accompanying institutional changes have been more gradual. While maintaining some core institutional arrangements, each country has adjusted to new labour market challenges and thereby created various labour market risks. In the period of de-industrialization, both South Korea and Japan experienced a sharp increase in the proportion of atypical workers, unlike the case of Taiwan. This study investigates how the institutional legacy of state corporatism matters in explaining how these three economies have differed in two respects: (a) a rapid increase in the proportion of atypical workers, and (b) the gendered characteristic of atypical employment—that is to say, a disproportionate concentration of women in atypical employment.

Result
A high proportion of temporary workers create durable challenges for growth, as it increases worker turnover and wastes firm-provided and firm-specific training. It also raises equity issues, as atypical workers face precarious employment, wage discrimination and significantly limited social protection. The wage difference between non-standard employment and standard employment is wide, and income inequality is increasing (OECD, 2007). Japan and Korea each faces labour market dualism between large firms and SMEs—which is to say, regular employment and atypical employment— the latter of which is poorly covered by social protection programmes. In addition, this dualism has precipitated a gender-segregated labour market in both Korea and Japan. Inherited institutional arrangements created during the industrialization period have created incentives for different types of responses in relation to employment practices, thus further strengthening the dualism. Unlike Japan and Korea, Taiwan has been experiencing de-industrialization without an apparent increase in the proportion of atypical workers or gender segregation in the labour market because its institutions have rendered no significant advantages for employers to embrace atypical employment. This study also discussed the validity and limitations of the VOC approach in studying the diversity and change in Asian economies. While this study agrees with Witt and Redding’s (2013) discussion of the limitations inherent in the CME–liberal market economy dichotomy in understanding Asian capitalism, a strength of the VOC approach lies with the concept of institutional complementarity which I here put forward as the welfare production regime. In other words, production system, skill formation, unionization and the welfare system complimented each other forming institutional arrangements in Korea and Japan centred on large firms. Furthermore, I argued that large firm-oriented and SME-oriented welfare production regimes can contribute to our understanding of not only East Asian political economy and comparative capitalism more generally, not to mention that which alludes to Asian capitalism. This article explored the institutional persistency in Korea, Japan and Taiwan and argues that these institutional legacies are crucial for creating different labour market outcomes as these economies de-industrialize. While the focus was around institutional stickiness, it should be also noted that some studies provide evidence of gradual changes in institutions and argue that skill formation in Japan is changing. These studies also find that large service companies (e.g. retail companies) also provide firm-specific training by relocating their part-time workers to different departments (Kim, 2005; Keizer, 2010), and part-time workers spend longer periods of time working in one firm as their firm-specific skills increase. However, part-time workers’ wages remain at only 40–60% of the level earned by regular workers (OECD, 2013). In Korea, the Ministry of Employment and Labour recently published the ‘Manual for Wage Structure Reform 2014’, which recommends revisions to the prevailing seniority-based wage system. However, the new policy is already facing barriers, as it is being subjected to harsh criticism by Korean labour unions. In conclusion, despite some important changes in institutions, the institutional arrangements that underpin welfare production regimes will seemingly take more time to change relative to the rapid transitions taking place in the industry of East Asia.

Excellence of the journal
Objective excellence: Socio-Economic Review is a SSCI-level journal. It is ranked 19th out of 142 journals in sociology (in the top 13.3%) and 21st out of 163 journals in political science (in the top 12.8%). The journal’s impact factor is 1.537 and the adjusted impact factor is 1.537.

Excellence of the research:
- This paper compares and analyzes the three countries ― Japan, South Korea, and Taiwan ― which all share the legacy of corporatism. This research is significant in that it shows, even in the same East Asian bloc, how labour markets could see very different results depending on the nation’s institutional context, by analyzing the three geographically close countries, but with very different institutional systems, from the perspective of institutionalism.  


- In particular, this paper has theoretical implications in that it not only logically criticizes the Varieties of Capitalism (VoC) theory, which strongly influences analysis of institutions, but also newly applies and develops the VoC in the context of East Asia.  


      


* Related Article and Site  

Sophia Seung-Yoon Lee (2016), Institutional legacy of state corporatism in de-industrial labour markets: a comparative study of Japan, South Korea and Taiwan, Socio-Economic Review. Vol 14, Issue 1, p73-95 

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