South Korea plans to freeze wages for public-sector employees for next year as part of efforts to overcome its deepening economic woes in the wake of the global financial turmoil, Yonhap News reported Wednesday quoting government sources.
According to officials at the Finance Ministry and other related agencies, public-sector wages for next year will be frozen at current levels and additional recruitment plans will also be put on hold except in some "inevitable cases."
The move comes as South Korea is gripped by the fallout from the global financial turmoil sparked by the collapse of major American investment banks last month. The South Korean government is struggling to shield the local economy from the external shocks with a raft of market stabilization measures.
The wage freeze and other belt-tightening guidelines will be approved at a committee earlier next month where policymakers will discuss the 2009 budget for the public sector, the officials were quoted as saying.
"Talks are underway to make a final decision, but opinions on the wage freeze and the number of total employees outnumber the others," a Finance Ministry official was quoted as saying. "If decided, at least 101 institutions including 24 state-run companies will be obliged to follow the guidelines."
Last week, heads of major banks and financial institutions issued a statement, pledging that they will step up reform efforts in return for the government's $100 billion debt guarantees and other market stabilization measures.
The public sector has been frequently under fire for dragging its feet in reforms and offering handsome pay and other benefits to its employees even while the nation's economy is feared to slip into a recession.
As of the end of 2007, South Korea's public sector had 259,159 employees on its payrolls and they saw their wages increase around 3 percent last year, according to the Finance Ministry.