1.Umbrella unions call for wage increase in 2016 wage and collective bargaining
On 15 February, the FKTU called for a 7.9% increase for regular workers and a 17.3% increase for non-regular workers.
On 29 February, the KCTU called for a wage increase of KRW 237,000 per month for both regular and non-regular workers.
※ The KCTU has also demanded that the minimum hourly wage be raised to KRW 10,000 for 2017,
The two umbrella unions have also publicized to their affiliated unions their recommendations for 2016 wage and collective bargaining, as well as information regarding their opposition to the government’s labor guidelines and performance-based wage systems.
2. The 2016 KEF Wage Adjustment Recommendations for Business
The Korea Employers Federation (KEF) has announced its 2016 Wage Adjustment Recommendations for Business. These recommendations provide an appropriate direction for wage adjustments with the view of creating jobs for youth and addressing the wage gaps amid a weakening employment environment due to the extended retirement age to 60, the aggravated dual structure of the labor market, and excessively high wages of entry-level personnel.
|
2016 KEF Wage Adjustment Recommendations for Business 1. In principle, business is recommended to avoid increasing wages in 2016. With the savings, companies can hire more employees and improve working conditions for vulnerable groups.
2. Companies which pay entry-level employees KRW 36 million (USD 30,800) or more in basic salary are advised to adjust these excessively high wage levels and hire more employees with the money saved.
※ As of 2015, the average starting salary of a regular worker with university degree is KRW 40.7 million (USD 35,000) for large companies; however, the average entry-level salary of a regular worker for an SME is estimated to be only 50.4% of that. ※ Considering the ratio of entry-level salary to per-capita GDP, Korea’s wage level (1.35) is considerably higher (by 60.2%p) than Japan’s figure (0.75).
3. Business is advised to replace their seniority-based wage systems with merit/performance-based wage systems. If a fundamental shift toward such a wage system is impossible, adoption in phases is the next-best solution. |
3. News on wage structure reform
While large companies have taken the initiative in adopting wage peak systems, there is still much to be done to reform the current wage structure. The wage peak system is actually a transitional measure away from the long-held seniority-based wage system. It is therefore urgent for business to move toward a performance-based wage system.
The MOEL plans to provide a variety of services to spread the use of performance-based wage systems nationwide this year, such as improved statistical data and infrastructure through wage surveys, free consultations for SMEs, and publication of the 2nd editions of the Wage Structure Reform Manual (First released March 2014) and Wage Structure Reform: Best Practice (First released in February 2015).
In January, the Ministry of Strategy & Finance advised 116 public corporations and quasi-government agencies nationwide to expand their performance-based wage systems to include non-executive level employees by the end of this year.