Overview of Korean Labour Market

Transcription

1 Overview of Korean Labour Market Presentation to IE Singapore iadvisory Korea Seminar Hyuna Choi SEA Reward Consulting Leader 25 July Towers Watson. All rights reserved.

2 Who We Are: A Leading Global Professional Services Company Our 14,000 associates in 37countries work together to help organizations tackle a wide range of people, financial and risk issues. The depth and breadth of our experience give us a unique perspective. It s a new world, and we re here to help you take it on. 2

3 Our Business Segments We offer practical, tailored solutions in the areas of benefits, talent management, rewards, and risk and capital management. Benefits Retirement Health and Group Benefits Technology and Administration Solutions International Consulting Risk and Financial Services Risk Consulting and Software Investment Reinsurance and Insurance Brokerage Talent and Rewards Rewards, Talent and Communication Data, Surveys and Technology Executive Compensation Exchange Solutions Extend Health, Inc. Retiree medical transition Individual medical plans purchased via a private exchange 3

4 Economic and labor market overview 4

5 Talent Attraction and Retention new hires How difficult in attracting and retaining university graduate? 35% 30% 25% 20% 15% 10% 5% 0% Global Korea AP developed AP fast growing "Feel difficulty in attracting university graduate" "Feel difficulty in retaining university graduate" In Korea, attracting university graduate may not be an issue but retention is more difficult Attraction factors Retention factors 1 Job Security Base salary 2 Base pay Manage/limit work related stress 3 Convenient work location 4 Company s reputation as a good employer 5 Healthcare & wellness benefits 6 Vision/Mission & value 7 Company s financial performance Career advancement opportunity Relationship with manager Retirement benefits Physical work environment Job security Source: Towers Watson 2012 TMR survey, 2012 GWS survey 5

6 Graduate salaries 6

7 Compensation seniority based Average salary level by tenure In Korea, salary is usually determined by tenure through Korean title system not by job size. <1yr 1~5 yrs 5~10 yrs 10~15 yrs 15~20 yrs 20~30 yrs Source: Korea labor research institute, 2012 Korea Japan German Spain UK France Netherland Sweden Whenever there is a Korean title change, it usually has a promotional increase which is 10~15% of increase When there is a strong labor union, this Korean title change happens almost automatically and company does not have controllability. However there are companies which have job and performance based salary system. Typically these companies have a market competitive compensation level and no labor union so that employees accept this system

8 Korean Title System Sa-jang : MD, GM, CEO Top mgmt Middle mgmt/ Supervisor General employees Bu- Sa-jang Jeon-mu Sang-mu Isa Bu-jang Cha-jang Kwa-jang Dae-ri Kye-jang* Ju-im* Sawon : Deputy CEO : In charge of overall business : In charge of ordinary business : *Ju-im and Kyejang are less common Korean titles : Entry level employees or clerical job holders Korean title has been basis of employee grade structure and symbol of seniority based culture Since it is not common to call or mention someone without Korean title, Korean title usually indicates the person s social status. Therefore it is very important to Korean employees When a person starts its career after graduation, he/she typically starts from Sawon. Then every 2~4 yrs, the person is expected to be promoted to next level with Korean title change.

9 Benefit Benefit Health care benefit is well covered by national health care system. Company provides additional medical check-up or various wellness programs as supplementary benefit. Company has to pay severance pay when employee resign or retire. Typically the formula is monthly salary multiplied by number of service years. Due to legislative change, companies need to adopt corporate pension scheme to make sure the fund security and to avoid employees using this money before retirement. Congratulatory & Condolence benefit and Gift for national holidays (Korean thanksgiving and Chinese New Year) are pretty common Overtime allowances for office workers are already included as part of guaranteed pay in many companies. 9

10 Common benefit items in Korea Various Benefit Items with Prevalence Source: Towers Watson 2012 Benfit Data Survey n=157 co.s 10

11 Cultural trend Which reward element is most important to Korean employees? Gender Age Role Reward factor Overall M F 20s 30s 40s 50s Top mgmt Middle mgr Front professi line mgr onal Admin Producti on Reliable pension plan Flexible work arrangement Paid vacation Merit increase Bonus Career opportunity Great interest on retirement plan Work life balance Low value of career opportunity as a reward factor 11

12 Summary Uniqueness of Korea from HR perspective and labor market Due to our cultural and historic uniqueness, Korea s HR system is different from other markets. Confucius culture Korean language which reflects seniority Dense population with little natural resources Four seasons A country surrounded by North Korea, Japan and China Homogeneous Contribute in uniqueness Korean title Seniority based compensation system Strong labor union Committed but not sustainably engaged employees Worker friendly labor law Relationship among employees are very strong and social 12

13 Questions? Thoughts? 13