'Wage Distribution System' Included in State Policy Agenda... Partial Implementation Possible in Second Half [New Administration Policy Issue]

Ministry of Employment and Labor Accelerates Wage Distribution System
Wage Information to Be Provided by Job, Position, and More
"Analyzed Data Will Be Posted on the Wage and Occupation Portal"
Details of Disclosed Information Must Be Specified for Implementation
Calls for Transition from Seniority-Based to Job-Based Wage System
System Already in Place in the UK, France, and Other Countries

The implementation of the 'wage distribution system,' which involves disclosing wage information based on job, position, and years of service as a prerequisite for wage negotiations beyond individual companies and for realizing equal pay for work of equal value, is gaining momentum. The Lee Jaemyung administration plans to include the wage distribution system initiative in its soon-to-be-announced state policy agenda and to swiftly promote the relevant system. There are also expectations that, as early as the second half of the year, some wage information needed on the ground may be made available.

According to the Ministry of Employment and Labor on the 23rd, the government is conducting full-fledged preparations to implement the wage distribution system. Authorities are considering how to establish policies and conduct fact-finding surveys necessary for the process of providing wage distribution data?such as the top and bottom 25%, average, and median values?according to workers' job, position, and years of service. The overall framework of the policy has already been set, and the government is now working on securing the required budget and scheduling consultations with experts for practical implementation.

A Ministry of Employment and Labor official explained, "Currently, we do provide wage information, but the range of information is insufficient. In particular, there is almost no data related to job and position, so we plan to supplement this and provide it." The official added, "We need to secure data, so we are planning a fact-finding survey. The idea is to analyze the collected data and post it on the (Korea Employment Information Service) Wage and Occupation Portal, which was established in April."

The Ministry of Employment and Labor intends to accelerate the implementation of the wage distribution system. As early as the second half of the year, it plans to review and analyze meaningful wage data obtained from existing workplace innovation consulting and industry-specific wage system improvement consulting projects and make this information available. The aim is to promptly provide information needed in the field, even before the full-scale implementation of the wage distribution system.

The government's commitment to implementing the wage distribution system is not new. However, the new administration has shown particular determination, largely due to the influence of the president and the newly appointed minister. Previously, President Lee Jaemyung pledged to "provide wage information and devise measures to reduce wage gaps in support of supra-enterprise (industry-, sector-, and region-based) bargaining" and to "introduce a wage distribution system to establish indicators for equal pay for work of equal value based on job, position, and years of service."

Minister of Employment and Labor Kim Younghoon also stated at last week's National Assembly confirmation hearing, "We will legislate equal pay for work of equal value, and the government will establish the foundation for autonomous bargaining between labor and management through a wage distribution disclosure system." However, since the term "disclosure" could be misinterpreted as providing individual companies' wage information, the government has decided to use the term "wage distribution system" instead.

A government official explained, "This administration is emphasizing supra-enterprise bargaining and equal pay for work of equal value, and wage information serves as the foundation for these efforts, which is why it is being highlighted. Regardless of the administration, policies related to wage information have continued, but this time, the initiative stands out more because of the campaign pledges."

There are calls within and outside the government to specify the details of the wage system, wage levels, and components to be disclosed. Given the differences by industry, region, and job category, it is argued that the information provided should go beyond simple comparisons and offer practical value. Some also believe that, to maximize the effectiveness of the wage distribution system, the labor market must shift from a seniority-based wage system to a job-based wage system. Conversely, some argue that disclosing wage information could itself accelerate the transition to a job-based wage system.

Oh Kyetaek, head of the Labor-Management Relations Research Division at the Korea Labor Institute, said, "Both Korea and Japan have relied mainly on seniority-based pay, but as the economy has developed and become more advanced, this system has reached its limits. Japan has already shifted significantly to a job-based pay system, and it is time for us to do the same." He added, "Regardless of whether the administration is conservative or progressive, efforts to provide wage information have continued. This means the clock cannot be turned back according to the political orientation of the government."

In countries such as the United Kingdom, France, Germany, and Australia, wage information disclosure is mainly aimed at reducing gender wage gaps. The 'Wage Information Brief 2024, Issue 6,' published by the Korea Labor Institute, states, "In Europe, efforts to realize equal pay for equal work at the European Union (EU) level have been pursued consistently since the 2000s," and evaluates that these efforts have influenced the establishment of related systems in each country.