Globalization and Labour Market Reform: Patterns of Response in Northeast Asia

Abstract

The ‘varieties of capitalism’ literature identifies the labour market and labour relations system as an institutional feature by which liberal market economies (LMEs) and co-ordinated market economies (CMEs) of advanced countries may be distinguished. This literature argues for the resilience of CME institutional features to the allegedly convergence-inducing or homogenizing effects of globalization. Resilience to convergence has also revealed different patterns of institutional adaptation to globalizing pressures among CMEs. This article examines the adaptation of labour institutions to globalization using the Northeast Asian Newly Industrialized Countries of South Korea (hereafter Korea) and Taiwan as case studies. Examples are given of how Korea and Taiwan have pursued labour market liberalization, but within institutional conditions (policies and politics) distinct from those associated with transitions to the LME. The origins of this distinctive pattern of response are explained, pointing out the need for explanations based on globalization to be supplemented by ones that emphasize economic legacies and political logics.