Establishing the ‘Winning Wages Committee’ to reorganize the pay system… “The main cause of the pay gap is seniority?”

The Prosperity Sharing Wages Committee was launched to discuss in detail the wage system reform plan, which is a key task of restructuring the labor market. The government sees the seniority pay system (pay-as-you-go system), where wages rise according to length of service, as the main cause of the pay gap, and is promoting a plan to change it to a job and a performance based pay system. However, as the wage system is for labor and management to decide independently, it is not clear whether the government’s ‘push’ will work. Labor criticized the chaebol-centred system and unfair trade between main contractors and subcontractors as the main causes of wage inequality.

The Ministry of Employment and Labor held an inauguration ceremony for the Win-Win Wage Committee at the Press Center in Jung-gu, Seoul on the 2nd. The Joint Prosperous Wages Committee is an organization that the Future Labor Market Research Association, which outlined the Yoon Seok-yeol administration’s labor policy, recommended the establishment of the wage system at the end of last year.

The co-chairs were Labor Minister Lee Jeong-sik and Seoul National University Sociology Professor Lee Jae-yeol. 13 experts, including Sookmyung Women’s University professor Kwon Soon-won, who was the chairman of the Future Labor Market Research Association, Kim Gyeong-rok, an adviser at Mirae Asset Management, and Han Seok-ho, secretary general of the Jeon Tae – il Foundation (former non-committee member of the Justice Party), and seven officials at the head level of seven related ministries will participate as members. Initially, Roh Jin-gwi, former head of the Central Research Institute of the Korean Federation of Trade Unions, was also included in the list of members, but it was later learned that he declined the position because participation was deemed inappropriate.

The proportion of domestic companies that present the level wage is 62.3% for workplaces with 300 or more employees and 42.4% for workplaces with 10 to 29 employees. 69.4% of workplaces with unions and 30.7% of workplaces without unions. The Ministry of Labor said, “Korea’s wage system still has a strong status, and seniority is particularly concentrated in trade unions and large companies. On the other hand, 61% of all businesses do not have a payroll system due to their weak personnel and labor capabilities.” He continued, “This wage system is the cause of widening the gap in the labor market by giving excessive benefits to organized workers who focus on large corporations and regular workers, while preventing SMEs and irregular workers from being compensated for their work.” According to the Ministry of Labour, the wages of non-regular workers in small and medium enterprises are currently 45% of the wages of regular workers in large corporations.

The Ministry of Labor announced that the Joint Prosperous Wages Committee will discuss not only salary issues but also plans to reorganize policies and systems to resolve the polarization of the labor market. In particular, the Win-Win Wage Committee conducted a fact-finding survey on industries with a large wage gap between the main contractor and the subcontractors for ‘equal pay for work of equal value’, analyzing foreign wage policies such as the United States, and prepare tax incentives. for companies reorganizing the wage system, and establishing a ‘win-win’ wage We intend to prepare a diffusion map.

The Korea Federation of Trade Unions said, “The root cause of the wage gap lies in the structural problems between large companies and small and medium-sized companies, such as unfair trade between main contractors and subcontractors, exploitation of private interests by chaebol conglomerates, and mass production without hid of non-regular workers. It is more correct to say that the cause is the lack of sharing in the performance of large corporations, rather than the selfishness of regular trade unions in large corporations and the existence of a wage system.” The Korean Confederation of Trade Unions also pointed out that “the main cause of polarization in the labor market is not the wage system, but the chaebol-oriented economic system.”

“The dual structure of the labor market is not due to the seniority wage system or the wage scale system,” said Oh Min-gyu, head of the relief research department at the Institute of Labor Studies. Even in places where the job grade system is established, a dual structure occurs. It happened not because of the wage system, but because of the greed of the company, but they only blame the senior pay and the union.”