One of Korea’s two major umbrella union groups decided to boycott talks with the government and management over the so-called ordinary wage system, dampening the Park Geun-hye administration’s hopes of settling the controversy through social compromise within the year.

The Federation of Korean Trade Unions said on Wednesday that it will not attend the dialogue panel being hosted by the Labor Ministry’s advisory committee on wage.

The decision is expected to further aggravate the already wide chasm between labor and business over the policy which significantly affects the amount of compensation for salary workers.

“Our stance is clear. We’ll wait for the court’s final verdict on the scope of the wage rule and not engage in further arguments,” union spokesman Kang Hoon-joong told The Korea Herald in a phone interview.

Labor and business circles have been at odds over whether to include bonuses and other allowances as ordinary wage, which is paid regularly to employees. It is used as a basis to gauge overtime, nighttime and holiday pay, and later affects the size of an individual’s severance package.

The Supreme Court is currently handling the wage dispute with all judges involved, aiming to reach a final verdict by the end of the year. More than 160 civil cases are being processed after the Supreme Court ruled in favor of labor unions in March last year.

Along with the nation’s top court, political parties and businesses had been projecting a quick settlement of the issue, prior to the umbrella labor union’s announcement.

Employment and Labor Minister Phang Ha-nam said in a meeting with the press last week that the government will draft a bill next month to settle the prolonged average salary dispute this year.

The advisory committee has also aimed to revise the current law on ordinary wages within this year with a panel of 20 experts.

If bonuses are recognized as ordinary wages, business circles expect about a 15 to 20 percent hike in labor costs. According to the Korea Chamber of Commerce and Industry, it will cost firms a total of 38 trillion won in addition to their regular labor costs.

By Suk Gee-hyun (monicasuk@heraldcorp.com)