Merit pay system in trouble

By Park Moo-jong

The post season of this year's pro baseball season is being held or is going to start soon in major countries where the sport is played, to be followed by the "hot stove league" for the next season of 2017.

The "hot stove league" features, among other things, negotiations between each player and management of the team about the size of their yearly salary for the upcoming season.

The negotiations, mostly tough, revolve, needlessly to say, around the performance of the player in the previous season. In short, a pro sportsperson's earnings depend on how much he or she contributed to the team during the previous season. His or her ability matters. There is no seniority.

In contrast, the majority of businesses, not to mention government organizations, generally adopt a seniority wage system, regardless of each employee's ability.

The performance-based wage system is the way things works in pro sports and in advanced countries, and now the government is struggling hard to introduce it to public corporations.

The merit wage system is a term that describes performance-related pay, most frequently in the context of educational reform or government civil service reform, according to Wikipedia.

"It provides bonuses for workers who perform their jobs effectively, according to easily measurable criteria. In the United States, policymakers are divided on whether merit pay should be offered to public school teachers, and other public employees, as is commonly the case in the United Kingdom," the dictionary says.

It was in the early 1990s that some "pioneer" businesses tried to introduce the system only to face all-out objections from their employees, particularly union employees who opposed it "desperately."

The reformative system had been shelved until the 1997 foreign currency crisis that forced the nation to the threshold of a debt moratorium provided momentum following a massive layoff of workers.

At that time, workers argued that the employers were attempting to import the system with an "impure" motive of not renewing the contracts with employees they disliked and weakening the labor union activity.

So far, employees' rank and salary in Korea have been based on length of service, not on merit. No matter how hard one works for the company or no matter how poor someone else works, they were and still are paid alike ― according to the length of service.

Nearly 20 years later after the merit pay system was mentioned, it is making headlines anew with union workers of the subway service going on a walkout in protest against the government's "ambitious" scheme to introduce a performance-based wage system for public organizations and corporations.

The majority opposition camp and progressive world are joining the union workers in condemning the government plan just for the sake of opposition, regardless of the citizens' inconvenience caused by the strike.

Merit pay, as is the case for pro sportspersons, is designed to raise the competitiveness of workers and their companies in the ever-intensifying competition in global markets.

The performance-based pay system is also necessary to help bring down costs and create more jobs for young people amid the sluggish local labor market.

Yet, the Seoul City administration, which manages most subway lines, reached a compromise against the government's plan, with the union to "seek an agreement with the workers before pushing ahead with the new wage system."

The two sides also reached a deal to not move forward with the dismissal of under-performing employees.

It is no wonder that Mayor Park Won-soon is being criticized for making a deal with the union with a presidential bid in mind.

The reason why the union opposes the new system is crystal clear: egoism and individualism.

Their struggle against the new formula means that they will try to get the maximum pay without competition, according to a seniority-based system, until their legal retirement.

Compared to workers in other fields, subway employees and union workers of Hyundai Motor get a yearly salary of 67 million ($61,000) to 96 million ($96,000) won, absolutely high pay, compared to that of other workers.

It seems that the union workers do not care about the future of their companies and the growing generation, only seeking ways to fatten their wallets.

It is quite natural that workers who are competitive and do well should be rewarded, while those who work poorly without making any effort should be given pink slip.

The government needs to push ahead with the performance-based pay system to improve corporate competitiveness and encourage workers who are doing their jobs faithfully and excellently.

The government, as it said earlier, should penalize public organizations that work the system with a carrot in one hand and a stick in other hand, while giving incentives and compensation to those who do, and freezing wages for those who do not.

Ability differs from person to person. Pay should differ from person to person, depending on ability, regardless of seniority.

New is the time we have to renew the term, "survival of the fittest."

Wage earners are also professionals like pro sports players.

Park Moo-jong is The Korea Times advisor. He served as the president-publisher of the nation's oldest English newspaper from 2004 to 2014 after working as a reporter at the daily since 1974. He can be reached at moojong@ktimes.com or emjei29@gmail.com.