The government said Thursday it will ask some of the nation's largest conglomerates to limit the amount of pay raises given to the highest earning management-level employees as the country moves to restructure struggling industries hurt by the global economic downturn and create more jobs for young people.
The Ministry of Employment and Labor is set to meet with the CEOs of the nation's 30 largest conglomerates later in the day and urge them to refrain from giving generous raises to the highest paid wage earners.
Labor Minister Lee Ki-kwon (Yonhap)
"If the top 10 percent makes this compromise, they will help increase job opportunities for young people and narrow the earnings gap between conglomerates and small and mid-sized enterprises," Labor Minister Lee Ki-kwon said.
The government says conglomerates pay a disproportionately large amount of money to senior executives compared with what the rest of the nation earns. And considering how the shipping, shipbuilding and steel industries are all faltering, they should rein in employees' salaries.
In the past, the shipping, shipbuilding and steel industries were Korea's growth engines, but they have been hit the hardest by the worldwide growth slowdown caused in part by oversaturated markets and stiff competition.
But some labor activists say although the government seems to be on the right track, it should focus its attention on CEOs and the wealthy, not the regular employees of conglomerates.
"People say full-time employees at conglomerates earn a high salary, but they are actually part of the country's middle class, also struggling with rising housing prices," said Lee Seung-cheol, spokesman of the Korea Confederation of Trade Unions.
The umbrella union and progressive civic groups have been urging the government to raise the income and corporate taxes for the CEOs and the rich.
Such calls, however, are opposed by the business community, which has pointed out that "populist demand" is always counterproductive and will only lead to a weakening of Korea's global competitiveness.
The government has also balked at raising taxes for big companies stressing any move in this direction could hurt investment and adversely affect the job market overall. (Yonhap)