Beyond public pay

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Beyond public pay

President Moon Jae-in’s administration has effectively scrapped his predecessor’s performance-based pay system in the public sector, with the Ministry of Strategy and Finance saying it would allow individual public institutions to use their own discretion in reverting back to the old salary system.

Although the government did not specifically nullify the guideline that suggests annual salaries be paid based on performance instead of seniority, the freedom to choose between the two is nevertheless a de facto reversal of the policy. For its part, the Ministry of the Interior announced it was doing away with a scoring system that gave preferential points or fiscal incentives to public organizations that complied with performance-based pay.

The hurriedly introduced performance-based pay system had many flaws. Since it was recommended in January last year, all 120 public institutions signed up for the new system by June without taking time to customize their guidelines through discussions with their respective labor unions. Of the 120, just 48 were able to enact the new system through board approval because they could not earn union consent. The system was designed to raise efficiency and productivity in the public sector, but it has also been criticized as a way to whip employees and kick out underperforming workers. In May, a district court in Seoul issued an injunction on a plan by the Korea Housing and Urban Guarantee to enforce a performance-based pay system because it did not have union consent.

Still, such a system is one way to make the public sector more productive. Most public enterprises are oversized and incompetent. Unions are more interested in protecting their vested interests than overseeing recklessness by the management. Taxpayers wish to see their money spent wisely and efficiently. A reversal in performance-based pay must not stall much-needed reforms in the public sector.

The administration must come up with new ways to enhance government efficiency through discussions with management and unions. That is how it can earn support for its agenda to increase hiring in the public sector.

JoongAng Ilbo, June 17, Page 26
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