This article investigates the changing direction of labor policy and revitalizing strategies of ‘organic state’ from the crisis of industrial relations, through the content analysis and process analysis of new labor laws, which amendment happened between May 1998 and January 2004. The content analysis of the amended labor laws indicates ‘dual liberalization’ that the state’s control over and protection for both labor and capital have been officially weakened. It can be interpreted that while recognizing the freedom of labor association and right to strike have weakened the state’s control over labor and protection for capital, abolishing the strict regulation in relation to dismissal and allowing the use of temporal worker and outsourcing have weakened the state’s protection for labor and control over capital. In a meanwhile, the process analysis of amending labor laws indicates that the ‘reform from above’ that has been led by President’s authority and ILO (International Labour Organization)’s support has been replaced with the way of ‘social pact’ that draws compromise between organized labor and capitalist associations. In short, it was possible for both labor and capital to reach compromise with the state’s withdrawal from control over and protection for the both, and even to put it in force as laws with the arena for tripartite negotiation. It was a resolution to derive an industrial relations conducive a difficult situation in which economic crisis is combined with democratization and furthermore, to set up the state’s roles again.