South Korea

January 26, 2007

The government and civil servants' unions held their first official meeting today to discuss the much-disputed plan to reform the public workers pension system.

In the meeting Home Affairs Minister Park Myung-jae promised that the government would finalize the reform plan based upon an agreement from the public employees' unions, but reiterated that it would not negotiate with illegal unions.

The Federation of Government Employees' Union chairman Park Sung-chul, in return, requested the minister to fully protect the union's labor actions.

The FGEU, the Central Government Officials' Labor Union and the National Educational Office Public Servants' Union met with the minister today, representing a collaboration of 39 public sector unions which have been opposing to the government's reform plan.

It was the first official meeting of government and public workers' unions after last year's enforcement of the new labor law that permits labor activities of civil servants.

"We must reform the current pension system to stabilize the nation's troubled pension fund. The government will strive to come up with reform plans with an agreement with the public employees, and seek measures to minimize the burden on them by increasing their retirement payment," Minister Park said.

"The government will also hold active negotiations with the unions within the law. Illegal unions will be excluded from the discussion," he added.

Earlier this month, a government panel released a "pay more, receive less" draft to reform the troubled public servants' pension system but was faced with vehement opposition from public officials as well as civic groups.

According to the panel's proposal, public employees will face more than a 3 percentage point increase in pension contributions, while their overall benefits will be reduced by roughly half.

The contributions will be increased gradually from the current 5.5 percent of monthly taxable income to 6.6 percent by 2008 and to 8.5 percent by 2018.

Also, the minimum age to be entitled to receive pension payments will be raised incrementally.

Currently, retirees begin to receive pension payments from the age of 60. But this will also be raised by 12 months every two years from 2023 before settling at 65 in 2031.

Although the government made clear that it was an inevitable reform as the 46-year-old pension scheme is expected to post a deficit of some 18.1 trillion won by 2030, public workers opposed to the plan due to the increased burden on them.

Aiming to finalize the measure in the first half of this year, the government asserted that its draft would prevent an anticipated depletion of pension funds in three decades by saving up to 870 billion won ($940 million) next year alone.

"As a matter directly related to our right to live, the pension reform must be reviewed under mutual agreement with the public employees," labor unions said. "The government cannot ask us to make uneven sacrifices."

The labor unions also asked the government for an extension of their retiring age, full protection of their labor rights, and an establishment of a permanent discussion channel for active opinion sharing between the two sides.

The government has been refusing to hold collective negotiations with public workers' unions, asserting that proper discussions can only be held when the unions abandon illegal activities.

Unions have filed a complaint to the Seoul Regional Labor Relations Commission, insisting that the government was illegally ignoring their rights.

After enforcement of the new labor law last year, about 60 unions including the FGEU were granted legal status by the government. But the Korean Government Employees Union, one of two labor unions representing low-level government workers, has been refusing to register to gain legal status.

Opposing the new labor law, unions including the KGEU have been demanding the government grant labor rights to hold strikes and remove the prohibition against high-ranking officials from joining the union.