Gov't urges financial firms' boards to act on pay reform

He was speaking at a meeting with the heads of public financial firms here on the government's drive to introduce a full-scale merit salary scheme in both the public and civilian sectors.

Yim's remarks came in response to worries about possible negative effects from any radical shift in the nation's pay program traditionally based on seniority and the length of services.

In fierce protest against the government's campaign, the Korean Financial Industry Union, a major umbrella union of bank workers nationwide, staged a general strike in September.

The union says such a performance-oriented approach will only undermine the quality of services and lead to damage to customers.

It plans to launch more collective actions next month.

The FSC chief, however, said it's inevitable that the pay-related reform will be carried out to enhance the competitiveness of local financial firms.

Many of South Korea's public companies have already agreed to introduce a merit pay system through a decision by the board of directors without a deal with unionized workers.

Yim said private financial companies should also join in the pay reform drive and called on workers to refrain from staging a walkout.

He dismissed a call that the government needs to learn from Wells Fargo's case and rethink the controversial policy.

"Some voice concerns about side effects from the performance-oriented culture, citing the US bank's case," he said. "But Wells Fargo has not stated any plan to abolish its performance-linked pay system, only saying it will improve the system including the elimination of product sale goals (for employees)."

While many financial services companies in South Korea already offer year-end bonuses to workers in accordance with their productivity, monthly salaries are still tied to rank and duration of service in a relatively rigid hierarchy. (Yonhap)