75% of Companies Say "Comprehensive Wage System Should Be Allowed"

KCCI Survey: Without Comprehensive Wage System,
52% Concerned About Work Hour Management Burden,
32% Worried About Worker Dissatisfaction Due to Wage Reduction

The Korea Chamber of Commerce and Industry in Jung-gu, Seoul, where the Commerce Day ceremony was held on the 31st. Photo by Kang Jin-hyung aymsdream@

As debates continue over the current comprehensive wage system, which pays overtime allowances in advance at a fixed rate, companies have maintained their stance on 'retaining' the system.

According to a recent survey conducted by the Korea Chamber of Commerce and Industry targeting over 300 companies that have adopted the comprehensive wage system, 74.7% of companies expressed the view that the system should be maintained as it is. Only 24.3% were in favor of banning it.

The comprehensive wage system refers to a system where allowances for work beyond the set working hours are predetermined and paid together with the base salary. For example, overtime allowances are calculated in advance based on a set number of extended working hours per month and included in the monthly salary. The opposing view (some labor groups) argues that employees work more than the overtime pay they receive, claiming it encourages unpaid overtime and long working hours. The supporting view (some business groups) argues that the comprehensive wage system removes incentives for unnecessary overtime, thus preventing excessive night work. They claim it actually leads to more employees leaving work by 6 p.m. while earning higher wages. They also argue that without the system, disputes arise over whether time spent drinking coffee or using social media counts as working hours, leading to unproductive conflicts.

In fact, the main reason cited for allowing the comprehensive wage system was that 'managing and calculating working hours is difficult,' accounting for 51.6%. This was followed by 'worker dissatisfaction due to actual wage reduction' (31.6%), 'concerns over increased labor costs such as overtime pay' (28.9%), 'worker dissatisfaction with strict working hour management' (28.4%), and 'demands to convert previously included overtime allowances into base salary' (16.4%).

Only 15% Responded That 'Comprehensive Wage System Overtime Allowances Are Less Than Actual Work Compensation'

Results also showed that the overtime allowances set by the comprehensive wage system are similar to or greater than the compensation for actual overtime hours worked. Companies responded that the allowances paid (for extended, night, and holiday work) are similar to actual overtime hours at 47.5%, and 28.6% said the overtime allowances under the comprehensive wage system are actually higher. Conversely, only 15.2% responded that the allowances are less than the actual overtime hours worked.

Looking at the types of comprehensive wage system adoption, more than half of the companies (52.5%) chose the 'fixed OT' method, which schedules a certain amount of overtime separately from the base salary and pays a fixed allowance for it. Next, 29.2% adopted the 'fixed allowance system,' where the base salary is predetermined and separated from overtime allowances but without specifying detailed breakdowns. Lastly, 18.3% used the 'fixed salary system,' where the base salary is not predetermined separately and the monthly salary includes overtime allowances.

Meanwhile, more than half of the companies (51.5%) implement the comprehensive wage system based on the 'employment contract,' followed by 'annual salary contract' (18.6%), 'internal regulations such as work rules' (18.3%), 'customary practice without separate regulations' (7.3%), and 'collective agreements' (4.3%).

Regarding the scope of application, 'all employees' (43.9%) or 'office workers' (42.5%) were the most common, followed by 'production and field workers' (21.3%), 'sales and field staff' (19.3%), 'research and development staff' (16.3%), and 'IT staff' (4.3%).

In response, a Korea Chamber of Commerce and Industry official stated, "The comprehensive wage system is a free contract between workers and employers to pay a fixed allowance for overtime work such as extended hours. Employers benefit from easier management, and workers use it as a means of wage compensation in certain areas. Rather than completely banning it, measures should be taken to strengthen supervision to ensure companies comply with the law, especially those with potential wage arrears."

Yuilho, head of the Employment and Labor Policy Team at the Korea Chamber of Commerce and Industry, said, "The comprehensive wage system has been a useful wage calculation method in industrial sites for a long time through labor-management agreements. Before discussing the abolition of the comprehensive wage system, rigid working hour systems should be improved to respect the autonomous choices of labor and management. Through this, both corporate competitiveness and workers' quality of life can be enhanced."

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