Kim Rahn is the managing editor of The Korea Times. Since joining the company in 2003, she has covered various beats including the presidential office, Seoul city government, the Bank of Korea and the tourism industry. In 2014, she won the Society of Publishers in Asia (SOPA) award for her coverage of the ordeals of migrant women in Korea.
Firms urged to freeze salaries for CEOs
By Kim Rahn
.jpg?w=728)
Lee Ki-kwon
By Kim Rahn
The government is encouraging companies to freeze CEO salaries as part of efforts to enable firms to hire more young people with the money saved.
Labor Minister Lee Ki-kwon called for large conglomerates to cooperate in efforts to reduce youth unemployment during a meeting with executives of personnel affairs from the nation’s 30 largest companies at Lotte Hotel Seoul, according to the ministry, Thursday.
The move comes as large firms have been criticized for being reluctant to hire new employees citing a lack of money while giving billions of won in salaries and bonuses to their executives.
“From the viewpoint of ‘noblesse oblige,’ the salaries of CEOs at some large firms are beyond an acceptable level,” Lee said. “Also, workers are forced to retire at some companies due to the firms’ financial troubles, but some retiring CEOs receive billions of won in retirement allowance.”
The government scheme is to freeze the salaries of executives whose incomes are within the top 10 percent of the workforce and have the firms use the money to hire young workers.
If the high-income executives agree on the salary freeze, the government plans to offer tax benefits and other supports to the companies.
“If CEOs of large conglomerates set an example by having their salaries frozen, ordinary workers and young jobless people will trust the government efforts and the efforts will have a bigger effect,” Lee said.
A Korea Labor Institute study showed that the combined salaries of the top 10 percent workers reached 119 trillion won. There were about 1.34 million of such workers as of 2013, with their average annual salary being 88.2 million won.
If their average salary hike level is lowered by 3 percentage points, the companies can save 3.6 trillion won and hire 220,000 new workers at maximum, the study said.
Labor groups have criticized executives for getting high salaries while trying not to increase ordinary workers’ wages.
“We can’t accept the situation where CEOs receive more than 10 billion won in annual salary while forcing a wage freeze for employees,” an official from the Federation of Korean Trade Unions said.
He cited the example of Samsung Electronics, which decided to freeze workers’ salaries this year due to last year’s poor profits but paid 14.5 billion won in salary to its mobile chief Shin Jong-kyun.
“If the company halves Shin’s salary, it will be able to hire hundreds of thousands of new workers,” he said.
A report by market researcher Chaebul.com also showed that 119 CEOs of companies were paid from 500 million won to billions of won in salary last year, although the companies recorded deficits.