The Effect of Employing Irregular Workers on the Corporate Subjective Perception of Labor Productivity

Why does the rate of Korean irregular workers maintain a high level despite continuous government restrictions such as the Irregular Workers Protection Law enacted in 2007? From the perspective of institutional isomorphism, we present a hypothesis that perception, customs, and norms formed by the spread of the irregular workers within the organization after the 1997 Asian financial crisis positively have affected the corporate subjective perception of irregular workers. To test the hypothesis, we conduct empirical analysis using various methodologies suggested by previous studies, such as linear panel models and OPM. As a result of the analysis, it is found that the increase in the rate of irregular workers improves the corporate subjective perceptions of labor productivity. This phenomenon suggests that government regulations, such as no discrimination under the Irregular Worker Protection Law and the employment form conversion to regular workers in the public sector, have limitations in solving the problem of polarization caused by the expansion of irregular workers. Therefore, the need exists for comprehensive policy alternatives that include ways to change perceptions and practices of irregular workers in the internal labor market.