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KLI Employment & Labor Brief No. 83 (2018-05): Establishing Subsidiaries in the Public Sector: Direction and Challenges
KLI Employment & Labor Brief No. 83 (2018-05): Establishing Subsidiaries in the Public Sector: Direction and Challenges
  • Table of Contents

    Contents

    1. Introduction

    2. Subsidiary: Definition and Status

    3. Establishing a Subsidiary: Requirements and Direction

    4. Conclusion: Business Independence and Autonomous Labor Process

     

    Summary

    The types of hiring available in the course of regularizing irregular jobs in the public sector today appear to be: direct hiring, hiring through subsidiaries, and setting up other types of corporations (foundation or cooperative). Direct hiring would be the best option given the purpose and objectives of the Moon Jae-in government’s policy, but differing circumstances could also require hiring through subsidiaries. Employment in public institutions’ subsidiaries certainly has advantages but also disadvantages: governance being subject to the parent institution, considerably lower wage than in the parent institution, relatively insecure employment, difficulties in cost control, and the stigma as “second-class” workers. One way of overcoming such limitations would be to define the institutional requirements on the founding and operations of a subsidiary by allowing negotiated contracts between a public institution and its subsidiary. The authorities and responsibilities between the two institutions must be clearly defined. In addition, introducing worker-directors or parent-subsidiary joint labor-management council could improve governance. There should also be efforts to improve employment conditions, for example: improving wage and working conditions by eliminating gaps and revising the wage structure, defining the principle of direct hiring, enabling job security and excluding elements of unlawful dispatch work.