Seniority is outdated

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Seniority is outdated

Representatives of labor unions, companies and the government are poised to knock heads over general guidelines on wages and other working conditions in a collective negotiation to be held later this month. The key dispute revolves around an expected shift for a current employment system based on seniority to a performance-based salary system. While the government and companies want to introduce the new system, unions oppose it.

The revamp of the employment system appears to gain momentum in workplaces around the country. According to the Korea Employers Federation, 31 percent of its member companies have amended their systems toward performance-based ones since 2013. The media often report success stories in which struggling companies found a breakthrough in their business crises after drastically changing their incentives. For instance, Leepack, a local manufacturer of automatic packaging machinery, and Coens Energy, a provider of services for oil and gas drilling, both saw high turnover rates fall sharply after they replaced systems based on seniority, in which wages automatically increase every year, with new performance-based systems.

Under the seniority-based system, workers can hardly expect pay increases, no matter how hard they work. Under the new system, however, workers don’t have to move to other companies because they can earn more money if they demonstrate better performances. There’s another merit as well. If companies’ sales rise thanks to increased productivity, they can create more jobs, which is a boon for our younger generation in their job hunts.

Unions are preparing to fight employers’ introduction of new systems with a general strike on the grounds that the new system only fuels competition and deepens a sense of relative deprivation among employees. But those attitudes could trigger strong suspicions that they are only bent on protecting their own interests — without allowing competition among themselves. Unionized workers don’t care about non-salaried employees, who work for same hours as them yet receive about half the pay.

The principle of “same pay for same labor” must be adopted. But that’s impossible under the current seniority-based wage system because non-salaried workers cannot work for a long period of time at companies. Labor experts criticize unions for trying to protect their vested interests.

If the wage gap between regular and non-salaired workers can be narrowed, it could help our labor market regain vitality. We look forward a wise outcome from the talks.

JoongAng Ilbo, May 10, Page 30
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