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The government and major labor organizations here are expected to face off in what could be a crippling battle for both sides over the performance-linked wage system, which may also spell trouble for the country's already sagging economy.
The government is moving to introduce and expand the performance-based payment system to all public firms, with an apparent hope to create a spin-off effect on private companies.
The country's two largest labor umbrella organizations have vowed to take part in an all-out struggle.
The performance-based wage system is the latest move by the government to boost labor flexibility to create more jobs, especially for young adults.
In February, the jobless rate of people aged between 15 and 29 shot up to a record high of 12.5 percent before slightly scaling back to 11.8 percent the following month. The country's overall unemployment rate stood at 4.3 percent in March, down from 4.9 percent the previous month.
The government has often blamed rigidity in the labor market for the high jobless rate, claiming automatic annual pay raises have long prevented the voluntary departure of under-performing employees, and also citing labor market rigidity as a cause of the ongoing slump for Asia's fourth-largest economy.
In its latest quarterly revision announced last month, the Bank of Korea projected the local economy will expand 2.8 percent this year, down from a 3 percent on-year expansion forecast three months earlier.
Previous government efforts to boost labor flexibility included a wage peak system, under which workers, often regardless of their performance, will have their salary permanently reduced once they reach a certain age. The system too has faced and continues to face strong resistance from the two labor organizations -- the Federation of Korean Trade Unions (FKTU) and the Korea Confederation of Trade Unions (KCTU).
The two labor organizations promised an even stronger fight against the performance-linked wage system, insisting that the evaluation of so-called performance cannot but be subjective, which in turn will force laborers to be nothing but obedient.
"A wage system that will grade laborers based on how close they are to the management and pay different wages based on such evaluation will only weaken or remove public service of public firms and threaten the lives and safety of the people," they said in a joint press conference in Seoul.
The two labor organizations said they will hold a protest rally in Seoul on June 18, with some 50,000 people expected to take part.
They will stage an all-out walkout of their 200,000-strong members in September if the government continues to push for the introduction of the new wage system, they added. The labor organizations agree the new wage system will help reduce the jobless rate, but only by creating what they call temporary and poor-quality jobs.
On Monday, the government said it will freeze the wages of workers at all public enterprises that fail to introduce or expand the performance-based wage system before the year's end.
On the other hand, those that voluntarily introduce the new wage system before the deadline will be given an incentive of up to 30 percent of their workers' monthly salary, according to the finance ministry, which aims to introduce the new pay system to 120 public companies and institutions in the first phase by the year's end.
Already, more than 40 percent of the 120 entities had introduced or completed a process to introduce the new wage system as of Monday.
Resistance is particularly strong among financial public companies.
Kim Jae-chun, CEO of Korea Housing Finance Corp., offered to resign last week after over 85 percent of its unionized employees voted down the performance-based salary system. The Korea Development Bank, the Industrial Bank of Korea, the Export-Import Bank of Korea and almost all other state-run banks have yet to shift to the new pay system.
Yim Jong-yong, chairman of the Financial Services Commission, convened a meeting of financial public company CEOs on Tuesday and warned that institutions failing to comply with the performance-based pay will be given various disadvantages in compensation, budget allowance and payrolls.
"A culture of performance-based salary should be introduced to financial public companies as soon as possible, in order to shake off their easy-going image," said Yim. (Yonhap)
The government is moving to introduce and expand the performance-based payment system to all public firms, with an apparent hope to create a spin-off effect on private companies.
The country's two largest labor umbrella organizations have vowed to take part in an all-out struggle.
The performance-based wage system is the latest move by the government to boost labor flexibility to create more jobs, especially for young adults.
In February, the jobless rate of people aged between 15 and 29 shot up to a record high of 12.5 percent before slightly scaling back to 11.8 percent the following month. The country's overall unemployment rate stood at 4.3 percent in March, down from 4.9 percent the previous month.
The government has often blamed rigidity in the labor market for the high jobless rate, claiming automatic annual pay raises have long prevented the voluntary departure of under-performing employees, and also citing labor market rigidity as a cause of the ongoing slump for Asia's fourth-largest economy.
In its latest quarterly revision announced last month, the Bank of Korea projected the local economy will expand 2.8 percent this year, down from a 3 percent on-year expansion forecast three months earlier.
Previous government efforts to boost labor flexibility included a wage peak system, under which workers, often regardless of their performance, will have their salary permanently reduced once they reach a certain age. The system too has faced and continues to face strong resistance from the two labor organizations -- the Federation of Korean Trade Unions (FKTU) and the Korea Confederation of Trade Unions (KCTU).
The two labor organizations promised an even stronger fight against the performance-linked wage system, insisting that the evaluation of so-called performance cannot but be subjective, which in turn will force laborers to be nothing but obedient.
"A wage system that will grade laborers based on how close they are to the management and pay different wages based on such evaluation will only weaken or remove public service of public firms and threaten the lives and safety of the people," they said in a joint press conference in Seoul.
The two labor organizations said they will hold a protest rally in Seoul on June 18, with some 50,000 people expected to take part.
They will stage an all-out walkout of their 200,000-strong members in September if the government continues to push for the introduction of the new wage system, they added. The labor organizations agree the new wage system will help reduce the jobless rate, but only by creating what they call temporary and poor-quality jobs.
On Monday, the government said it will freeze the wages of workers at all public enterprises that fail to introduce or expand the performance-based wage system before the year's end.
On the other hand, those that voluntarily introduce the new wage system before the deadline will be given an incentive of up to 30 percent of their workers' monthly salary, according to the finance ministry, which aims to introduce the new pay system to 120 public companies and institutions in the first phase by the year's end.
Already, more than 40 percent of the 120 entities had introduced or completed a process to introduce the new wage system as of Monday.
Resistance is particularly strong among financial public companies.
Kim Jae-chun, CEO of Korea Housing Finance Corp., offered to resign last week after over 85 percent of its unionized employees voted down the performance-based salary system. The Korea Development Bank, the Industrial Bank of Korea, the Export-Import Bank of Korea and almost all other state-run banks have yet to shift to the new pay system.
Yim Jong-yong, chairman of the Financial Services Commission, convened a meeting of financial public company CEOs on Tuesday and warned that institutions failing to comply with the performance-based pay will be given various disadvantages in compensation, budget allowance and payrolls.
"A culture of performance-based salary should be introduced to financial public companies as soon as possible, in order to shake off their easy-going image," said Yim. (Yonhap)
