Wage guideline sparks backlash

Feuds between labor and management escalated Thursday as the government said it would exclude regular bonuses paid only to employees currently at work from ordinary wages.

The Ministry of Labor issued new guidelines for labor-management negotiation that would only count bonuses paid to all workers, including those on leave, as ordinary pay.

The announcement came a month after a landmark ruling by the nation’s top court that ordered that regular bonuses be classified as part of ordinary wages. The ruling was expected to put a significant financial burden on companies that were not including bonuses as ordinary pay.

Ordinary wages are used as the basis for calculating compensation and benefits, such as overtime pay, holiday shifts, paid annual leave, severance pay and other allowances. Bonuses are not currently included in ordinary pay.

So far, the government has customarily recognized regular bonuses as part of ordinary wages only when such bonuses are paid on a monthly basis.

The new guidelines are expected to increase labor-management disputes at workplaces over the scope of ordinary wages and the definition of incumbent workers. Many companies in Korea provide regular bonuses only to employees currently at work. This means that the bonuses paid to incumbent workers won’t be seen as ordinary wages under the government guidelines.

The new guidelines also limit workers’ right to demand retrospective pay increases on the court decision until the existing wage agreement with management expires this year.

“Considering that the business needs some time to prepare for the new wage system, it is correct to interpret the intent of the ruling as keeping the principle of good faith before engaging in a new wage negotiation,” the ministry said.

Labor unions lashed out at the government’s announcement, saying the new guidelines would cause confusion and conflict at workplaces.

“The government has arbitrarily interpreted the court ruling in favor of businesses. (The new guidelines) would only further instigate confrontation between labor and management,” the Korean Confederation of Trade Unions, a major progressive labor group, said in a statement. The Federation of Korean Trade Unions, another major labor organization, also expressed regret over the new measures that they have no “subjective and rational standards.”

The businesses also addressed concerns but remained discreet.

The ministry said it had delivered the new guidelines to provincial government offices. It plans to urge businesses to simplify their complex wage systems and replace the regular bonus payment with performance-based incentives, officials said.

The government’s guideline is not legally binding. But the guidelines are used as a standard when mediating disputes or labor negotiations at workplaces.

Observers say labor strife is likely to deepen this year as major labor problems remain unsolved through the Economic and Social Development Commission, a tripartite consultative body of labor, management and the government. FKTU quit the panel last month to protest against the police’s raid of KCTU offices amid the railway workers’ strike.

By Cho Chung-un (christory@heraldcorp.com)