Go gingerly on wages

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Go gingerly on wages

The government is suggesting that companies be allowed to change employment regulations without prior approval of unions in order to enforce the so-called peak wage system. Employment regulations are a set of rules on working conditions and hiring and dismissal procedures that companies and unions have agreed on. They are protected by the Labor Act. Any changes to them must be done with approval from a union. That legal provision has served as a major stumbling block to any moves to change wage systems in order to better cope with a new environment of an extended retirement age and to make room for hiring opportunities for young people. The peak wage system would automatically cap employees’ salaries at a certain age and then shrink them. That will allow employees to work more years after the legal retirement age is extended to 60. But any wage system that hinges on work performance of employees instead of years in service cannot be considered because of blanket opposition from unions. The corporate sector is forced to find other means to finance increased labor costs from an extended retirement age and that will inevitably be to cut down on new recruitment. That’s bad for our young generation looking for jobs out of college.

To do something about the bottleneck in the labor market, the government is proposing to make it easier for companies to change employment rules. The extended retirement age guarantees longer working years. Workers will have to cooperate with companies and settle for smaller paychecks in their final years on the job. But the government must not unilaterally make the change. Settling for a smaller salary when they reach a certain age is something workers cannot accept easily. The government should be talking with the labor sector to persuade workers if it does not want to see strikes.

The labor sector also must see things differently. A poll showed that 90 percent of the public believe salaries should be paid according to work performance. The Federation of Korean Trade Unions signed a pact with the government and employers’ groups to cooperate in redesigns of the wage system to create more jobs in 2008 and 2013. Yet it is now threatening general strike to prevent any changes to working terms. Employers must join with the government to persuade the unions because they will be hurt if labor conflicts are prolonged.

JoongAng Ilbo, May 29, Page 34

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