32% Of Corporations Are Running the Annual Salary System

An increasing number of corporations are adopting the annual salary system through the agreement between labor and management.

The Ministry of Labor revealed on the 5th that a survey was taken against 4998 business enterprises with more than 100 employees on `the annual salary system & introduction and actual management conditions of the piecework distribution system`, and the results showed that 32.3 Per Cent (1612 enterprises) were enforcing the annual salary system by January.

The business enterprises adopting the system were only 1.6 Per Cent in late 1996, when the Ministry of Labor introduced the system for the first time, but they rose to Δ 3.6% in 1997 Δ 15.1% in 1999 Δ 23.0% in 2000 Δ 27.1% in 2001.

Labor ministry said, “Labor and management seem to have a mutual agreement to improve productivity through the annual salary system. As more and more corporations adopt the system, wage negotiations are more focused on individual increase, rather than the entire company’s increase.”However, 46.7 Per Cent of the enterprises were known to have adopted the `mixed salary system`, which applies individual increase rate upon the previous basic wages. Such result hints that domestic adoption of the system might be still too early. On 13.6 Per Cent of the enterprises adopted the complete American piecework system.

Also when achievements were evaluated, the cases of difference between the maximum and the minimum below 20 Per Cent were Δ 55.1% above director-level Δ 65.9% above manager/section chief-level Δ 56.5% below deputy manager-level, which were all more than half.

By the categories of business, adoption rate of the system remarked as high as Δ 53.3% in finance/ insurance Δ 52.2% in real estate/ rental & service business, but on the other hand, it was as low as Δ 10.8% in transportation/ communication Δ 16% in educational service business. Also, 66.9 Per Cent of the top 30 corporations and 78.4 Per Cent of public corporations were enforcing the annual salary system.

Meanwhile, the corporations adopting the piecework distribution system increased from 5.7 Per Cent in 1996 to Δ 7.0% in 1997 Δ 16.0% in 1999 Δ 20.6% in 2000 Δ 21.8% in 2001 Δ 23.4% in 2002. The piecework distribution system is that after labor and management determine aims and standards of piecework distribution beforehand, and outcomes are distributed after the aims are achieved.

Jin Lee leej@donga.com