A proposed amendment to the Labor Standards Act that would allow companies to pay part of performance-based pay or bonuses in local currency (regional gift certificates) has been submitted to the National Assembly. With large-scale performance bonuses recently continuing mainly in the semiconductor industry and elsewhere, the measure aims to channel corporate bonuses into local consumption to revitalize regional economies.
Rep. Park Min-kyu of the Democratic Party of Korea led the introduction of the partial amendment to the Labor Standards Act on Monday, which would allow part of wages to be paid in regional gift certificates on the premise of workers' explicit consent.
The current Labor Standards Act sets the principle that wages be paid directly in currency. However, wages may exceptionally be paid by means other than currency when there are separate provisions in laws or collective agreements.
The amendment adds "explicit consent of the worker" to these exceptions and specifies regional gift certificates as a means of payment other than currency. Accordingly, if a worker agrees during the process of concluding an employment contract, a legal basis will be established for paying part of wages, such as performance pay or bonuses, in local currency.
Park explained that as bonus amounts have been growing, mainly among large corporations, linking these to local consumption could bring virtuous-cycle effects on regional economies, such as expanded sales for small business owners and traditional markets. Because regional gift certificates can only be used at affiliated stores within a region, they could help reduce consumption leaking outside the area, he said.
The background to the bill also reflects concerns raised by some local governments. It was pointed out that foreign workers tend to remit a substantial portion of their wages to their home countries, limiting the ripple effect on regional economies, and the judgment is that using local currency could induce a certain amount of local consumption.
"This amendment allows part of wages to be paid in 'regional gift certificates' on the premise of the worker's explicit consent," Park said. "The purpose is to create a foundation for a virtuous cycle in which corporate profits and the bonuses and performance pay paid accordingly contribute to revitalizing regional economies."
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