The government is moving quickly to write the principle of "equal pay for work of equal value" into law. The Ministry of Employment and Labor is preparing a roadmap, targeted for release in December, that would codify the principle in the Labor Standards Act, expand the disclosure of wage information and promote bargaining above the company level. The aim is to eliminate wage discrimination between permanent employees and non-regular workers — temporary and contract workers — and to ease the dual structure of the labor market. Non-regular workers at companies with fewer than 300 employees currently earn just 41.5% of what permanent employees at companies with 300 or more employees are paid. The gap clearly needs to close. But it reflects a tangle of factors: employment status, company size and productivity, and differences in job content and skill levels. Rushing to legislate while leaving those structural issues untouched, simply because it was a presidential campaign pledge, risks deepening labor-management conflict.
The biggest obstacle is a pay system built around seniority, in which wages rise with length of service regardless of the value of the work performed. When two people doing the same job are paid differently based on tenure, the standard for what constitutes work of equal value must be set out clearly first. Without a fair yardstick for assessing job difficulty, responsibility, skill and performance, a flood of disputes and lawsuits is all but certain. Labor groups fear pay cuts from a shift to job-based pay, while employers worry about uniform wages that ignore differences in productivity.
The scope of application is also contentious. Permanent and non-regular workers at the same site, prime contractors and subcontractors, and large and small companies all differ in working arrangements and business conditions. Productivity and ability to pay vary from firm to firm, and applying identical wages through bargaining above the company level could sharply increase the burden on smaller businesses. Moreover, with the revised Trade Union Act already causing considerable confusion, pushing legislation through while the criteria for setting wages remain unclear raises the risk of repeating the labor-management clashes seen over the recently revised Trade Union Act, this time in wage policy.
Japan, which adopted equal pay for equal work before South Korea did, began drawing up guidelines in 2016, enacted legislation in 2018 and, after a grace period, extended the rules to small and midsize firms in stages by 2021. Rather than making pay for permanent and non-regular workers identical, it focused on eliminating unreasonable discrimination. South Korea too should proceed step by step, starting with objective job evaluation standards and a shift toward performance-based pay. A phased approach that respects the characteristics of each industry and company and relies on agreement between labor and management is essential. A fair wage system requires acceptance on the ground and broad social consensus before political haste.