Pay cuts for all

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Pay cuts for all

Executives at financial and state-run institutions have willingly given up portions of their salaries and bonuses to ease company efforts to weather economic hardship and the financial meltdown.

As a result, some of them are receiving less than ordinary employees.

But it is inconsistent to cajole executives to tolerate lower pay or withheld bonuses, while not demanding the same from the rest on the payroll for fear of upsetting the labor unions.

Many employees in state banks and corporations are therefore refusing promotion to the executive level.

As economic prospects deteriorate, state enterprises and banks are considering restructuring new employees’ salaries.

Bankers in their first year on the job here receive salaries that account for 207 percent of per capita gross domestic product, overtaking 135 percent of GDP per capita in Japan and 61 percent in the United States.

If new employees are paid less, banks can use the extra funds to hire college graduates and trainees, in this way contributing to easing the employment crunch. But the move can at the same time distort income stratification.

The paychecks of executives and new employees will get thinner while the rest, protected by the union, will go on receiving the same monthly check.

Such a wayward pay structure won’t bode well for corporate health, job-sharing or other efforts to fight the crisis.

Middle-level officials should not be exempt from the pain-sharing campaign. Only under a fair pay system can job-sharing and other workplace restructuring succeed.

State companies and banks should use the present hard times to revamp their overall pay system. They should stop giving out fat incentive salaries and instead offer monthly pay according to once-a-year salary contracts, a practice largely in place among private companies.

Labor unions of state-invested companies and banks have already professed their strong opposition to pay cuts.

But they should learn to modify their rallying cries given the exceptional economic climate.

Tightening is inevitable in acute times. Salaries can always be raised when business improves.

Labor unions are not a privileged set and if they act as if they are, they are unlikely to avoid criticism from others in society trying to stay afloat in this calamitous period.

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