Salary Cut of Public Workers Mulled for Job Sharing
By Lee Hyo-sik
Staff Reporter
Salaries of new recruits at state-invested enterprises will likely be cut this year as part of the government's efforts to raise funds to financially help private businesses that practice ``job sharing'' and other schemes for retaining workers. With rapidly deteriorating employment conditions, the government also plans to provide tax benefits to companies refraining from downsizing their workforce.
According to the Ministry of Strategy and Finance Friday, the government is thinking about slashing wages of new recruits in the public sector by about 10 percent this year, amounting to 300 billion won, and using part of the money to financially assist private firms implementing the job sharing scheme.
The basic mechanism of job sharing is for two or more people to share one full-time job. The method, which was traditionally used in the U.S. and Europe to fight unemployment, has recently been getting a strong push here to minimize layoffs.
Some of the most common methods suggested are taking pay cuts, going on unpaid vacations and giving up bonuses and benefits. But there has also been resistance from workers who see the forced cut of overtime and wages as a threat to their livelihood.
``Reducing entry-level salaries at public companies does not equate with more hiring because of the pre-fixed number of new recruits and ongoing public sector restructuring. With the saved money, we could provide financial support to private firms that put job sharing into place,'' a ministry official said.
The nation's 305 public companies plan to hire up to 13,000 new workers in 2009. Conversely, the finance ministry has required 69 state-run institutions to slash about 19,000 workers, or 13 percent of their combined payrolls over the next four years.
The official said the government is currently exploring wage cuts and other methods to help improve the nation's job market, adding it plans to announce job boosting measures in mid-February.
Additionally, the ministry is considering providing tax incentives to businesses that practice job sharing.
``We are also looking at expanding the corporate tax deduction and cutting income tax rates, among measures, for companies with the job sharing program proposed earlier by the Ministry of Labor. We will make every effort to study potential measures and put them into practice as soon as possible to improve labor market conditions,'' another ministry official said.
The moves came after President Lee Myung-bak called for wage cuts to promote job sharing among workers, prompting companies to join the move at a time when the nation lost 12,000 jobs in December, the first annual job loss in five years.
It expects more tightening in the job market in the coming months, with nearly 600,000 new high-school and university graduates set to join the already overcrowded job market and businesses continuing to downsize workforces to cope with the increasingly pessimistic economic outlook.