Public firms to cut starting salaries for college grads

SEOUL, Feb. 19 (Yonhap) -- South Korea's major state-run companies will slash
their starting salaries for fresh college graduates by up to 30 percent this year
to provide more job opportunities amid a tightening labor market, officials said
Thursday.
The move comes as the government is encouraging public and private-sector
companies to adopt "job sharing" measures, allowing them to cut the salaries of
existing workers with the aim of employing more people.
The salary cut will be applied to a total of 116 public companies that give their
first-year workers who graduated from college more than 20 million won
(US$13,600) in annual salary, the Ministry of Strategy and Finance said in a
statement.
Those companies include power monopoly Korea Electric Power Corp., Korea National
Housing Corp. and Korea Land Corp., along with state-run banks such as the Korea
Development Bank and the Industrial Bank of Korea, according to the ministry.
The ministry said that it will cut rookie salaries by 1-30 percent depending on
how much they receive annually in basic pay. The cuts will remain in place until
they are promoted to executive posts.
With the reduced labor costs, public companies will employ more interns, it added.
The move will help narrow the salary gap between public and private enterprises,
which usually makes it tough for smaller firms to recruit workers as job seekers
rush to positions with higher income and better job security in the public
sector, the ministry said.
The average salaries of rookies in the public sector stand at 2.93 million won as
of end of last year, 1.2 times more than those of their counterparts in the
private sector, according to industry data.
Last week, Finance Minister Yoon Jeung-hyun said that around 200,000 jobs will
evaporate this year as he expects the economy to contract 2 percent, the first
negative growth in more than a decade.
kokobj@yna.co.kr
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