In 2003, investment decreased due to continued pattern of sluggish domestic market, which brings about economic difficulties. In particular, regardless of 3% of economic growth, the Korean economy's ability to create jobs sharply fell.

An increasing number of manufacturers moved their production bases overseas and the employment stability grew more and more uncertain due to the bipolarization of the labor market and growing youth unemployment.

Furthermore, This industrial hollowing-out caused the decline of domestic demand, reduction of corporate investment, and increase of industrial conflicts. Mired in this vicious cycle, the Korean economy was feared to lose its base for growth potential.

With the uncertainty for jobs was raising more and more, there was a nation-wide spread perception that expansion of uncertainty for employment would become a main factor to hinder the social integration and domestic economic growth potential.

In this serious situation, on December 26, 2003, the labor, management, public interest groups and the government decided to push forward the Social Pact for Job Creation at the Plenary Meeting of the Economic and Social Development Commission. Since then, lots of discussion had been made, establishing the Basic Committee to prepare for the historic Social Pact for Job Creation, which was reached on February 8, 2004.

The management will try to continue to create jobs through expansion of investment and refrain themselves from artificial adjustment of employment. But in case employment adjustment is inevitable, employers will minimize the number of workers dismissed through good-faith consultations with workers and try to reemploy the dismissed first when they hire workers later on.
- The Management will try to be faithful to social responsibility and stabilize employment by building a basis for trust between worker and employer by practicing transparent and ethical management, such as making information available to workers.

Recognizing that the core of job creation is to enhance corporate competitiveness, the labor will offer active cooperation for increasing the corporate productivity.

The labor will cooperate in stabilizing wages over the next two years, especially, in areas where wages levels are relatively high, in an effort to create jobs and reduce the wage gap with non-regular workers and workers in SMEs.

Putting job creation as one of the priorities of the national policies, the government will try to create business friendly environment, reviewing all of regulations that may hinder investment expansions such as starting businesses and constructing more factories easing regulations on business activities. Furthermore, the government will actively support for labor and management efforts to create jobs and promote the quality of employment for the vulnerable groups such as non-regular workers through building employment-friendly infrastructures and expanding social security nets etc.

('03.12.26) The Plenary Committee adopted job creation as a top agenda in 2004 and decided to push forward the Social Pact for Job Creation.

('04.1.12) Composition of the Basic Committee for the Social Pact for Job Creation and agreement to arrange the Pact(draft) by February 7
* Members of the Basic Committee are Vice-Chairman of the Economic and Social Development Commission, Secretary- General of the Federation of Korean Trade Unions, Vice-Chairman of the Korea Employers Federation, Vice-Minister of the Labor Ministry and two members of public interest groups.

The Basic Committee held an open forum to listen to opinions from experts and had eight times of official meetings and ten times of unofficial meetings.

The conclusion of the Social Pact will be a turning-point to increase social integration and gather ability of people nation-wide, promoting quality of work for the vulnerable workers including non-regular workers.

The Social Pact will contribute to promoting expansion of the labor and management participation in nation's policies in that labor and management participated in establishing and performing policies as responsible actors.

The Social Pact will provide an epoch-making turning point for industrial relations based on dialogue and compromise, not just as confrontation and conflicts in that labor, management and the government achieved self-determined compromise by social dialogue.