A Study of Striking a Balance on Labor Market Flexibility under the Legal System

This paper primarily focuses on the type of legal system, divided into civil law and common law systems. It also analyzes how the legal system affects labor markets. The first question is whether labor markets under different legal systems have any distinctive characteristics. In addition, the next question is how the different legal systems can reform their labor markets. The first question takes into account the current trends of labor markets in civil law and common law systems. First, employment and labor law regimes rely on codification in the civil law system and judicial decisions in the common law system. Second, employment contracts are based on the primarily imperative rules in the civil law system, while founded on the dispositive rules in the common law system. According to the second question, it is important to redefine flexibility. Labor market flexibility shall be defined as enhancing bilateral interests between employers and employees. In general, people recognize that labor market flexibility is the ability of employers to make changes to workers’ workforces, wages, and unions. However, it is also necessary to take a look at the employee’s perspective of the labor market. Consequently, one should examine different approaches to strike a balance of interests between employers and employees in civil and common law countries including Korea.