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Korean government to pay ‘fair allowance’ to short-term workers

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Korean government to pay ‘fair allowance' to short-term workers

The government will introduce a new allowance and raise pay for short-term public-sector workers as part of a sweeping plan to stamp out unfair employment practices affecting irregular workers whose contract is less than one year across state-funded organizations.

At a Cabinet meeting Tuesday, the Ministry of Employment and Labor reported that the plan, drawn up jointly with related ministries, is aimed at rooting out practices such as repeatedly renewing 11-month contracts to avoid paying severance and sidestep giving permanent jobs to short-term workers. The new measure is expected to be adopted next year.

According to a government survey of 2,100 state-related bodies, there are roughly 146,000 fixed-term workers in the public sector, with about half — some 73,000 — on contracts of less than one year. The average monthly wage for these workers is 2.89 million won ($1,960), but those on contracts that last less than one year earn slightly less at 2.8 million won a month.

Based on those findings, the labor ministry has decided to work toward banning contracts shorter than 12 months and raising pay for short-term workers in cases where such employment is unavoidable, saying it will make the government a “model employer” for private companies.

A key measure is the introduction of a “fair allowance” for public-sector workers hired for less than one year. The allowance would be calculated as a percentage of a reference amount of 2.54 million won a month — what the ministry calls the average “living wage,” equal to 118 percent of the legal minimum wage. The shorter the contract, the higher the rate, reflecting the greater impact of job insecurity on those workers.

Employees on one- to two-month contracts would receive 10 percent of the reference amount in extra pay, while those on three- to four-month contracts would get 9.5 percent and those on five- to six-month contracts 9 percent. From seven months onward, the rate is set at 8.5 percent. Under this rule, a worker employed for 11 months would receive about 2.49 million won in allowance when the contract expires, paid separately from their regular wages.

This comes months after President Lee Jae Myung’s criticism of the government’s “immoral” practice of keeping workers on 11-month contracts to avoid granting permanent status and paying severance to its own fixed-term workers.

The government will also move to close wage gaps within the public sector by making sure short-term workers get at least the average living wage, which will be included in next year’s national budget. Meanwhile, it plans to improve other benefits such as meal subsidies and holiday bonuses.

The labor ministry reaffirmed the principle that workers should be hired as regular staff with full-term contracts. For work where shorter terms of employment are unavoidable, the government or organizations involved would have to go through a strengthened review system to receive approval.

Current workers who are repeatedly hired on short-term contracts will be candidates for conversion to regular status, the ministry said.

The government also plans to require public institutions to track and reveal the number and share of irregular workers they employ. Institutions will be required to publicly justify the employment conditions when they increase the share of irregular staff.

“The public sector should take the lead in correcting unfair employment practices affecting irregular staff and become a role model by reasonably improving their treatment,” Labor Minister Kim Young-hoon said. “We will work to ensure that progress in the public sector spreads to the private sector so that everyone who works is respected in the workplace and rewarded in line with the value of their labor, making workplace democracy a reality.”

Critics warn that the scheme could amount to a waste of taxpayer money, and distort wage-setting if it is later expanded beyond the public sector. They argue that wages should primarily be determined by market factors such as job difficulty, required skills and responsibility.

“The president’s one remark should not become a justification for spending taxpayers’ money in a way it should never be used,” Hong Sung-gul, emeritus professor of public administration at Kookmin University, told The Korea Times. “If you tell private companies to pay more, they won’t suddenly start writing short-term contracts. Most likely, they’ll just cut headcount instead.”

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