Government-commissioned study recommends labor reform

The Association for Research on Future Labor Market, which the government commissioned to come up with labor reform, suggested shifting wage plans based on job classification and adding more flexibility to the weekly 52-hour work plan. The plan recommends that the traditional labor framework based on the industrial age be revamped to respond to low birth rates, an aging society, and the fourth Industrial revolution.

The association recommended that the government innovate the wage system and develop a breakthrough to extend retirement in preparation for the super-aged society. This requires a shift from the salary step system in which wages are raised based on years of service to the job performance pay system, which compensates workers based on role, performance, and skill level. It advised that the calculation unit for weekly extendable hours of the current 52-hour weekly work system should be diversified by introducing monthly, quarterly, semi-annually, and annual units and be allowed to be flexibly adjusted based on the needs of the business.

Japan, which experienced an aging population much earlier than Korea, introduced a law that offers opportunities for those exceeding the retirement age of 65 to allow them to work until 70. Also, the job performance pay system was introduced to prevent discouragement of employing seniors so that wages could be adjusted based on work type. By contrast, 56% of businesses employing more than 100 employees and 68% of businesses with trade unions adopt a job step system, discouraging companies from hiring senior employees. Unlike advanced economies, which regulate extended work hours by month and year, the weekly 52- hour work system restricts companies’ workforce capabilities, undermining national competitiveness.

From this perspective, the recommended plan is convincing. The younger generation expects fair compensation based on performance rather than age and years of service. Labor reform is inevitable in expanding women’s economic activities and employing more gig workers who work hours as they wish. The government must accelerate efforts to address deep-rooted problems in the labor market.

Many obstacles are ahead, particularly involving the amendment of several labor relation laws. If the government fails to convince labor circles and the opposition party, conflicts will only worsen, and reforms will merely become empty promises. What is more important than coming up with a reform plan is to convince the public of the need for reform. We should not repeat previous failures where good intentions eventually result in false hopes.