Shinchang Electrics co. offered union leaders a proposal that would reduce wages at the auto-parts company by 20% in exchange for no layoffs among its 810 workers this year. Eight days later the union agreed.
The prevailing cultural attitude is summed up this way:
“We have to go through this together. We are colleagues and friends…
Practically speaking, this would mean that when business does turn around, the workers are there. The expertise would not be lost; and rather than losing 810 consumers totally, 810 families will be more frugal.
In South Korea, it appears job preservation is the government’s number one goal. Just maybe, it would be easier to preserve jobs than create them?
Leaders of major industry groups, unions, civic groups, government ministries, etc. met and came to a non-binding compact they call “a grand bargain for social unity.” This compact is not legally binding. However, the involved employers will not layoff workers. Unions will accept wage freezes and cuts to preserve their members jobs and benefits. The government will sweeten the pot by providing tax breaks for companies that follow through and preserve jobs.
South Korea’s approach is worth watching. If the tax credits, and social consensus preserves core industries and companies and jobs, so that when economic activity picks back up, the South Korean economy takes right back off, without missing a beat, then this approach minimizes the harm from the economic downturn.
Could this approach work here too? It is worth considering. Losing the ability to make steel, or shoes, or wind turbines, or cars is very difficult to recapture. However, the culture of “me first” and the rugged individual is ingrained in our country. The yells about limiting CEO or CFO income to a set number of the “average worker” in the same company has led to howls of socialism from some.
Still, without the greed and excess of the unregulated financial markets, this depression would not be happening.
Just – what if the attitude of “We are all in this together” could prevail over “taking care of Number One”. That would be a major change, but it is a change worth considering.