Even Entry-Level Employees Become Team Leaders... First Publication of Best Practices in Job-Based Pay System

Last Year, 54.9% of Companies Used Seniority-Based Pay System... Down 3.8%P from Previous Year

A container trading company improved its rank system focusing on job roles. (Source: Ministry of Employment and Labor)

[Sejong=Asia Economy Reporter Moon Chaeseok]

#Manufacturing company A, which trades containers, completely changed its rank system to a job-based pay system. Previously, to become an office manager, one had to be promoted to executive director, but now even regular employees can hold the position. Even entry-level employees can become team leaders.

#Smart factory solution manufacturer B, with over 300 employees, changed its base pay system to a job-based pay system through labor-management agreement. They introduced job allowances, regularized the job evaluation system, and then implemented the job-based pay system itself.

A smart factory solution company introduced a job-based pay system through labor-management agreement. (Source: Ministry of Employment and Labor)

Efforts to change corporate pay systems, mainly based on seniority, to job-based pay systems are in full swing among companies. To do this, it is essential to introduce a sophisticated job evaluation system. The 'Job Evaluation Tool' distributed by the government is a representative manual.

The Ministry of Employment and Labor announced on the 26th that it has published for the first time a casebook compiling examples of companies that transitioned to job-based pay systems using the job evaluation tool. It includes successful cases of job-based pay system adoption from 11 companies across 6 industries.

The casebook presents step-by-step job evaluation methods and includes practical tips. It contains various cases where the results derived from job evaluations were applied to the companies' job-centered HR management, including wage and compensation systems, evaluation systems, rank structures, and training.

An official from the Ministry of Employment and Labor explained, "Under the principle that regular and non-regular workers should receive the same pay for the same work, advanced countries such as Europe and the United States actively implement job-based pay systems."

Source: Ministry of Employment and Labor

According to the supplementary survey of the Ministry of Employment and Labor's 'Establishment Labor Force Survey,' the proportion of workplaces with 100 or more employees operating a seniority-based pay system decreased from 60.3% in 2017 to 54.9% last year. In other words, less than half of workplaces currently use job-based pay systems.

Besides the casebook, the Ministry of Employment and Labor also published manuals for using job evaluation tools in the construction and shipbuilding industries, as well as in the banking and steel industries.

Ryu Kyung-hee, Director of Labor-Management Cooperation Policy at the Ministry of Employment and Labor, explained, "The materials published this time introduce various companies that adopted job-centered HR management using the job evaluation tool and developed industry-specific job evaluation tools and utilization manuals."

Director Ryu said, "Through this, we expect the autonomous introduction and activation of job-centered HR management by labor and management."

Meanwhile, the Ministry of Employment and Labor announced in January last year the 'Support Direction for the Spread of Job and Competency-Based Wage Systems,' stating its intention to change the seniority-based wage system to a job-based system.

The seniority-based system is criticized for excessively increasing corporate labor costs in the current era of low growth and aging population.

This content was produced with the assistance of AI translation services.