TY - JOUR
T1 - Examining the seniority-based pay system in Korean companies
T2 - current trends and its implications for Asian economies
AU - Lee, Young Myon
AU - Kim, Jung Eun
N1 - Publisher Copyright:
© 2024 Informa UK Limited, trading as Taylor & Francis Group.
PY - 2025
Y1 - 2025
N2 - Human resource management, including the design and implementation of pay systems, is influenced by the specific national context in which it operates. Challenges often arise when HRM practices that have been established in advanced countries are transplanted to developing nations, as they may not fully align with the unique circumstances and cultural dynamics of the target country. Until the 1980s, rapidly growing South Korean companies embraced the seniority-based pay system (SPS) in order to encourage employee tenure. The 1997 IMF foreign currency crisis led to an effort to shift away from this model, which was seen as unrelated to job roles and performance, towards alternative systems. Despite two decades of reforming efforts, SPS pay still prevails, particularly among production workers at large manufacturing companies under trade unions. The workplace panel survey data provides evidence that the implementation of a SPS system does not display any significant negative impact on firm performance, as measured through various methods. As such, the question is not whether to abolish the old system, but instead how to accommodate the new system. The study emphasizes aligning pay systems with the nation’s history, culture and industrialization rather than imposing foreign models.
AB - Human resource management, including the design and implementation of pay systems, is influenced by the specific national context in which it operates. Challenges often arise when HRM practices that have been established in advanced countries are transplanted to developing nations, as they may not fully align with the unique circumstances and cultural dynamics of the target country. Until the 1980s, rapidly growing South Korean companies embraced the seniority-based pay system (SPS) in order to encourage employee tenure. The 1997 IMF foreign currency crisis led to an effort to shift away from this model, which was seen as unrelated to job roles and performance, towards alternative systems. Despite two decades of reforming efforts, SPS pay still prevails, particularly among production workers at large manufacturing companies under trade unions. The workplace panel survey data provides evidence that the implementation of a SPS system does not display any significant negative impact on firm performance, as measured through various methods. As such, the question is not whether to abolish the old system, but instead how to accommodate the new system. The study emphasizes aligning pay systems with the nation’s history, culture and industrialization rather than imposing foreign models.
KW - Seniority-based pay
KW - South Korea
KW - hobongje
KW - pay system
KW - trade union
KW - yeonbongje
UR - http://www.scopus.com/inward/record.url?scp=85193722273&partnerID=8YFLogxK
U2 - 10.1080/13602381.2024.2354834
DO - 10.1080/13602381.2024.2354834
M3 - Article
AN - SCOPUS:85193722273
SN - 1360-2381
VL - 31
SP - 112
EP - 132
JO - Asia Pacific Business Review
JF - Asia Pacific Business Review
IS - 1
ER -