The issue of worker dismissals remains a controversial and contentious topic within the Republic of Korea ("Korea"). For much of its modern history, Korea's workers benefited from implicit guarantees of lifetime employment, buttressed by legislative protections against dismissal, that served to compensate workers for sacrifices made to further the government's plans for economic development. Indeed, the galloping pace of industrialization and economic expansion for many years provided an ample cushion upon which Korean businesses could absorb the costs of lifetime employment. In time, however, a competitive shift in the international economic environment slowed the advance of the Korean economy and subsequently eroded the capacity of its businesses to bear the burden of this social bargain. By the mid 1990s, Korean management found itself threatened by deteriorating financial conditions and the lack of legal means to cut rising labor costs and remedy widespread workforce redundancies. Alert to the economic dangers wrought by this situation, the Korean government launched several efforts to facilitate managements' efforts at worker dismissals by amending Korea's Labor Standards Act ("LSA"). While these amendments formally dismantled the lifetime employment regime, vociferous resistance from organized labor blunted the reach of reforms and has since prevented the establishment of a truly flexible employment system. Even where tangible progress has been made towards liberalizing the system, the threat of costly strikes and violent worker protests often renders management effectively unable to implement its downsizing plans.
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