Wages put business and labor on a crash course

A Korean business lobbying group set a guideline yesterday calling for a 2.4 percent wage hike this year, raising concerns over a possible conflict with the labor community, which demands a higher increase.
The Korea Employers Federation also urged local businesses to freeze wages for college graduates and high-income executives as a way to help create more jobs for entry-level workers.
“The average starting salaries for college graduates in Korea were 94.6 percent of those in Japan last year, though Korea’s gross national income was only 51.6 percent of that of the neighboring country,” the organization said in a statement.
It added that “the abnormally high income level” is discouraging local companies from hiring more workers, so a wage freeze for college graduate entry-level workers is needed to help companies recover their job-creating capacity.
According to the organization, the average wage for entry-level workers in Korea reached $23,600 a year in 2006, compared with Japan’s $24,950.
The wage freeze and lower-than-expected income hike proposals, however, will likely cause conflict with the labor community, which has asked for more than a 9.3 percent increase, market observers said.
The Federation of Korean Trade Unions, one of Korea’s two umbrella labor groups, earlier proposed 9.3 percent and 18.2 percent hikes for regular and non-regular workers, respectively, for this year.