Government Takes Strong Stance on Merit Pay System for Public Organizations

On May 9, the South Korean government finalized its plan for giving incentives to public organizations adopting a merit pay system.

According to the plan, 30 public enterprises and 90 quasi-government agencies are required to implement the system before the end of June and December this year, respectively. The total personnel expenses of those refusing to do so are scheduled to be frozen next year while an incentive equivalent to 10% to 30% of the basic monthly pay is to be provided for each selected among the others through an evaluation process.

Until now, 53 out of the 120 South Korean public organizations have completed their labor-management talks or voted for the system. The 53 consist of 15 public enterprises such as the Korea Electric Power Corporation and the Incheon Port Authority and the 38 quasi-government agencies including the Korea Trade Insurance Corporation.

The government has moved ahead with the plan since February this year but the progress has been slow with public sector workers’ trade unions dead set against it. The Federation of Korean Trade Unions and the Korean Confederation of Trade Unions, the two largest national labor groups in the country, have formed a joint committee and are planning to make a statement on May 10 in order to deter the implementation of the plan by means of a general strike if necessary. In addition, the joint committee is expected to work together with opposition lawmakers so as to make use of the result of the recent April 13 general elections, which turned out in favor of them.