Korean government looking to overhaul corporate pay system; Domestic companies’ wage systems are so complicated that even employees do not precisely understand how their salaries are calculated
September 3, 2013 Leave a comment
Gov’t looking to overhaul corporate pay system
Seo Dong-cheol, Jang Jae-woong
2013.09.02 18:29:46
A survey of 1,000 South Korean companies with 100 or more staff on their payrolls showed that basic wages constituted an average of 57.3 percent of workers’ annual salary, said the Ministry of Employment and Labor Monday. Recently, Korea has seen a series of lawsuits regarding ordinary wages, with a Supreme Court trial on a case concerning ordinary wages scheduled to be held at 2:00 pm on September 5. The trial will be presided over by the chief justice, and at least two-thirds of the 13 Supreme Court justices will be seated. The thorny issue of ordinary wages is attributed to companies’ complicated wage systems that consist of various types of allowances and bonuses. Domestic companies’ wage systems are so complicated that even employees do not precisely understand how their salaries are calculated. Consequently, workers’ performance and capacity are not proportionately tied to their salaries, and corporations are saddled with diverse types of allowances. Gaining ground is the argument that the more belatedly the basic wage and ordinary wage systems will be revamped, the more difficult it will become to tackle the issues regarding the retirement age and resolving youth unemployment to improve job creation and the quality of employment. A government official said “a fundamental shift in wage systems will ease the financial burden on corporations, increase productivity and employment and improve labor-management relations.” The Ministry of Employment and Labor set up a new division and a research task force committed to establishing a more reasonable wage system with the goal of resolving the ordinary wage issue and settling the retirement age at 60 by 2016
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