Ministry of SMEs and Startups Opens Applications for 'SME Performance Sharing System'... "Expanding to 100,000 Companies Next Year"

Ministry of SMEs and Startups.
Photo by Asia Economy DB

[Asia Economy Reporter Junhyung Lee] The Ministry of SMEs and Startups announced on the 6th that it is continuously recruiting small and medium-sized enterprises (SMEs) wishing to participate in the 'Performance Sharing System between SMEs and Workers.' The performance sharing system is a scheme where business owners and workers share management performance.

SMEs wishing to participate must choose one of seven types of performance sharing, including management performance bonuses, wage level increases, performance reward deductions, stock options, and in-house employee welfare funds, and agree to share. After the agreement, they can apply online through the 'Comprehensive Management System for SME Workforce Support Projects.' Companies already sharing performance can apply immediately.

The Ministry of SMEs and Startups plans to expand the number of companies adopting the performance sharing system to 100,000 by next year. According to the ministry, there are currently 55,972 companies that have introduced the performance sharing system.

To encourage SMEs to participate in the performance sharing system, the ministry provides benefits to companies that have introduced it, including ▲up to 30 bonus points in job evaluations ▲eligibility to apply for job creation promotion funds ▲up to 26 bonus points in evaluations for selection as military service designated companies. Companies adopting the performance sharing system can receive a 10% corporate tax credit on the management performance bonuses paid. Workers receive a 50% income tax reduction benefit. However, workers with total annual salaries exceeding 70 million KRW are excluded.

Jung Ki-hwan, Director of the Job Policy Division at the Ministry of SMEs and Startups, stated, "The performance sharing system helps reduce the wage gap between large corporations and SMEs and aids the influx of talented personnel into SMEs." He added, "The performance sharing system is becoming established as a new growth model for SMEs, and we will strive to strengthen incentives so that many companies can participate."

Meanwhile, SMEs that have introduced the performance sharing system showed positive responses. According to a survey conducted by the Korea Small Business Institute last year targeting 1,837 SMEs that introduced the performance sharing system, 72% of SMEs responded that the system helps alleviate manpower shortages in SMEs.

The results were also excellent. Companies that adopted the performance sharing system showed higher performance in terms of wage levels and job creation compared to those that did not. According to the Korea Small Business Institute, as of 2019, the average wage of companies adopting the performance sharing system was 9.1 million KRW higher than that of non-adopting companies. Additionally, the employee growth rate of companies adopting the performance sharing system was 2.1 to 3.2 percentage points higher than that of non-adopting companies.

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