"Need to Expand Youth Hiring Rather Than Wage Increase for High-Wage Workers"

KCCI Delivers Wage Policy Recommendations to Member Companies

The Korea Employers Federation (KEF) has advised its member companies to focus on hiring young workers and improving the business conditions of small and medium-sized partner companies rather than raising wages for high-income workers.

KEF announced on the 24th that it had recently delivered four wage policy recommendations, including this content, to its member companies on the 22nd, considering the current economic situation.

In January 2024, office workers are seen commuting near Gwanghwamun Intersection in Jongno-gu, Seoul. This image is unrelated to the article content. Photo by Jo Yongjun jun21@

In the recommendations, KEF argued that wage increases for high-income workers in large corporations should be kept to a minimum and excessive performance bonuses should be restrained. They pointed out that significant wage increases centered on large corporations and regular workers have led to a widening wage gap and worsened job mismatches, causing side effects.

KEF advised that it is appropriate not to comply when labor unions habitually demand high wage increases and performance bonuses despite poor business performance. They also emphasized that efforts should be made to increase youth employment and improve the business environment of small and medium-sized partner companies rather than raising wages for high-income workers. They believe that dispersing youth employment, which is concentrated in large corporations, can resolve both the labor shortage in industrial sites and employment insecurity among young people.

KEF also recommended improving work efficiency. They argued that inefficient work processes, such as habitual meetings, should be reorganized, and appropriate work distribution and delegation of authority should be implemented to enhance worker concentration during working hours.

They advised the establishment of a transparent and fair evaluation and wage system. KEF explained that a job- and performance-based wage system reflecting the value of work, individual performance, and corporate results should be established to improve productivity and organizational culture.

Lee Dong-geun, KEF’s Executive Vice Chairman, said, "Without stabilizing the excessively high wages in large corporations, it is impossible to resolve the dual structure of the labor market," adding, "Improving labor productivity, which is low compared to advanced countries, is an effective means to overcome low growth."