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(EDITORIAL from Korea Times on June 23)

All News 07:01 June 23, 2017

Merit pay system doomed

The new Moon Jae-in administration has been undoing most of the policies carried out by the previous conservative government. A case in point is the decision to scrap the performance-based pay system.

Last week, the Ministry of Strategy and Finance said it would allow public institutions to decide whether to adopt the merit pay system. The Park Geun-hye administration had been pressing ahead with the wage scheme based on achievement as part of its public-sector reform. But the withdrawal of the salary system was already forecast as President Moon pledged to abolish it during his campaign.

It is undeniable that the performance-based salary system was riddled with problems. More than anything else, it was introduced hurriedly in violation of relevant laws with the ultimate aim that all public institutions had to adopt the system within one year.

Of 120 public firms and institutions ordered to adopt the system, 48 introduced it only by a boardroom decision without obtaining consent from their workers. The Seoul Central District Court ruled last month against the state-run Korea Housing and Urban Guarantee Corp.'s adoption of the system, saying management needed the consent of its union.

Nonetheless, no one can discount the rationale of the system _ enhancing productivity and efficiency by sparking competition. Indeed, it is hardly surprising that public institutions, which are often called ''god's workplaces,'' have lax work ethics and low efficiency. This is why the abolition of the merit pay system must not lead to the stoppage of broad-based reform in the public sector.

Public institutions will likely revert to the old salary system based on seniority soon. This will backtrack on the badly needed reform intended to raise competitiveness and efficiency in the public sector through incentive-driven motives. It is certain that the public wants the bloated public sector to be more efficient and productive.

During his campaign, President Moon proposed replacing the merit pay system with a ''job classification pay system'' in which each worker's salary is determined by the importance and difficulty level of duties. But pundits expect this system will also cause a union backlash. This time, the government should map out viable alternatives that can enhance efficiency in the public sector through stepped-up discussions.

(END)

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