Wage Freeze Trend for Public Officials Next Year Amid '3 Highs Complex Crisis'

Rising Prices and Economic Uncertainty Spur 'Pain Sharing'
Wage Freeze or Minimal Increase Expected...Wage Freeze in 2009 and 2010 During Global Financial Crisis
Public Servants' Unions Likely to Protest Wage Increases Below Inflation Rate

[Asia Economy Sejong=Reporter Kwon Haeyoung] As consumer prices recently soared to 6% and the livelihood economy became unstable, the government is increasingly likely to freeze civil servant wages next year as a measure of sharing the burden. With the government pushing for intensive public sector reforms and Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho urging companies to refrain from wage increases due to concerns about wage-driven inflation, there is a prevailing sentiment within the government that even if civil servant wages are raised next year, the increase rate will be suppressed as much as possible.

According to the government on the 14th, the Civil Servant Salary Committee plans to decide the wage increase rate for civil servants next year at a plenary meeting on the 15th. The Civil Servant Salary Committee is composed of government representatives, civil servant labor unions, and private members. Regarding next year’s wage increase rate, the civil servant unions are reportedly demanding 2.6?3.2%, while the government is advocating for a range of 2.1?2.6%.

Once the Civil Servant Salary Committee reaches an agreement on next year’s wage increase rate and submits a recommendation to the Ministry of Economy and Finance, the ministry will make the final decision on the wage increase rate. The Ministry of Economy and Finance plans to decide the civil servant wage increase rate during the final stages of next month’s budget formulation, and there is even talk within the government of possibly freezing wages next year. A ministry official stated, "We are even considering freezing civil servant wages next year."

Previously, when the global financial crisis occurred in 2008, the government froze civil servant wage increases at 0% for two consecutive years in 2009 and 2010. Recently, concerns about the livelihood economy have grown due to the triple high?high inflation, high exchange rates, and high interest rates?and the possibility of an economic recession, leading to the judgment that the civil servant community should take the lead in sharing the burden. In particular, since Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho met with the Korea Employers Federation (KEF) and urged restraint on excessive wage increases due to concerns about wage-driven inflation, it appears inevitable that the government will also suppress the civil servant wage increase rate. The intensive reform efforts in the public sector also add weight to this expectation.

Choi Sang-dae, the second vice minister of the Ministry of Economy and Finance, also said at the briefing of the '2022 National Fiscal Strategy Meeting' on the 6th, "Civil servant salaries should consider past cases when the economy was very difficult as well as the consumer price inflation rate," but added, "Since civil servants are not currently facing business closures or unemployment risks, sharing the burden is necessary."

The civil servant unions argue that the wage increase rate for next year should be decided considering the inflation rate. Recent civil servant wage increase rates were 2.6% in 2018, 1.8% in 2019, 2.8% in 2020, 0.9% in 2021, and 1.4% in 2022. Although prices rose by 2.5% last year, the wage increase rate this year was only about 1.4%. Since this year’s inflation rate is expected to exceed 5% annually, if wages are frozen next year, significant opposition from the civil servant unions is also anticipated.

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