By Nam Hyun-woo
Meritocracy is emerging as a new taboo word among public financial firms in Korea, as the government’s push for performance-based salary and promotion systems ignites disputes between labor unions and management.
Financial Services Commission (FSC) Chairman Yim Jong-yong stressed last month that the institutions will face limits in personnel funding if they do not adopt performance-based salary and promotion systems.
This came as an urgent task for public institutions such as the Korea Development Bank, the Export-Import Bank of Korea (Eximbank) and Korea Deposit Insurance Corporation (KDIC). As labor unions severely oppose the government’s push, however, those state-run institutions are suffering internal strife.
One of the institutions most active in adopting meritocracy is the KDIC. According to the corporation on Tuesday, its President Gwak Bum-gook told ranking officials last week about the benefits and necessities of performance-based salary and promotion systems. Also on Friday, a meeting of some 200 employees was held about whether to adopt such systems.
However, its labor union members perceive Gwak’s move as “coercive,” claiming those events were mostly about explaining the performance-based salary system and its adaptation this month as a done deed.
An official at KDIC said: “Those meetings were done in a smooth way and employees are positive about the system.”
Eximbank Korea is also struggling to adopt the system.
While pushing for meritocracy, the FSC has urged institutions to organize task forces with the participation of both management and labor union. As its labor unions refuses to join the task force, however, Eximbank’s task force represents management interests only, while receiving consultations on the performance-based salary system from an outside company.
“Like other financial institutions, talking about meritocracy has become extremely sensitive among employees,” an official at Eximbank Korea said, adding that negative views are palpable among employees.
Korea Development Bank is taking a more prudent approach. “So far, we have not done anything to say we did something for a performance-based salary system,” said an official at the state-run bank, adding it is considering outsourcing a study on adopting the system.
The dispute between management and labor unions over meritocracy has reached its peak after seven public financial institutions left a management council of financial institutions on March 30 so that they could negotiate with their respective labor unions.
Those opposing performance-based salary and promotion systems say the systems provide grounds for management to sack those with low performance and unfairly coerce employees to do extra work.
Last week, some 4,500 unionized public service workers held a rally in central Seoul to denounce the government’s move.