Public-sector performance pay plan tossed

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Public-sector performance pay plan tossed

The performance-based salary system for government employees adopted during the Park Geun-hye administration as part of a reform in the public sector has been scrapped a year later by the new government.

However, the move is expected to raise a controversy, as it is backtracking on the government’s effort on raising the competitiveness and efficiency of the public sector through incentive-driven motives.

The committee on public institution management led by the Ministry of Strategy and Finance met Friday and said it will let the public institution to decide whether to adopt the performance-based salary system.

Although the committee did not use the term “abolish” or “scrap,” it is likely that many institutions will be withdrawing as the labor unions have been protesting, with some even bringing the issue to the court.

The withdrawal of the salary system was already forecast, as President Moon Jae-in during his campaign promised to abolish the performance-based salary system.

Additionally, the Seoul central court last month ruled against the state-run Korea Housing and Urban Guarantee for adopting that performance-based salary system, saying that management needed the consent of the union.

The performance-based salary system was adopted in June 2010 but was limited to top-level officials. The Park administration wanted to expand the new incentive-driven salary plan to 30 public companies and 89 quasi-government institutions.

At the time, then-Finance Minister Yoo Il-ho raised the need to implement the performance-based salary system that applied only to top executives in government institutions and public companies.

“We have applied various measures including adopting the performance-based salary system to top officials at public institution but the productivity [of public institutions] remains only 70 to 80 percent of the private companies,” Yoo said.

“The public institutions lack inside competition and the salary system and the organization itself fails to stimulate motivation.”

The government last June said that all 120 public institutions have signed up for the new salary system.

The committee under the Moon administration said it will not apply punitive actions against those that previously refused the salary system.

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