GLOBAL HUMAN RESOURCE MANAGEMENT
Global Human Resource Management
South Korea is the most developed country in East Asia due to a favorable political and legal environment. Also, it is the world’s eleventh largest economy with a GDP of USD 1.4 trillion and unemployment rate of 3.8%. Given the favorable business climate, most multinational corporations are setting up operations in the country. However, it is prudent that corporations familiarize themselves with pay, rewards, and benefits requirements in the state before starting their operations.
To begin with, organizations planning to set up operations in the country should be aware the average wages and salaries that employees should earn. Monthly wages in South Korea range between 0 to 33,000,000 won whereas the average wage is 1,796,644 won, which is about U.S. dollars 1,800 (Jung and Lee, 2009, p. 4). It is important to note that pay varies according to age with older workers (47.1%) likely to be paid 0-1,120,000 won. 43.6% of younger employees are most likely to earn 1,130,000-1,980,000 won whereas 44.9 % of middle-aged employees are most likely to earn 1,190,000-33,000,000 won. Likewise, employers are supposed to sign contracts with employees, which contain their job description, benefit, working hours, and compensation and termination requirements.
According to Korean Labor Standards Act, all companies are required to provide three months of maternity leave for their female employees and a minimum of three paid days and two non-paid day’s paternity leave for their male employees (Ae-Choi and Min n.d.). Additionally, companies with five or more employees must provide their employees with paid vacation days. The Labour Act stipulates that employees are entitled to a minimum of one paid vacation for each month of perfect attendance during their first year of employment. Employees who are in the second year of working for an organization and spent at least 80% of their previous year in work, they are entitled to 15-paid vacation annually. From the third year onwards, employees are entitled to 25 paid vacation days annually. Besides, all employees are entitled to 1 May (Labour Day) as a mandatory paid holiday and other national holidays.
Likewise, companies are required to provide their employees with social insurance and severance pay. Organizations are supposed to subscribe four types of social insurance for their employees that include national pension, unemployment insurance, worker’s compensation for industrial accidents and national health insurance (Globalization Partners 2016). When an employee voluntarily leaves work or otherwise after having been continuously employed for one or more years, the employer must pay him or her, a severance pay in an amount same or exceed 30 days’ average salary. Notably, some companies may provide additional fringe benefits that are not covered by the law such as additional days of leave for illness and paid vacation days in case employees lose their loved ones.
Conclusively, foreign companies have to familiarize themselves with pay, rewards, and benefits requirements that Korean employees are entitled to before setting up bases in the country. The Korean Labor Standards Act stipulates that employees are entitled to maternity leave, paternity leave, paid vacations, social insurance and severance pay. In addition, some companies go extra miles in providing other fringe benefits to their employees, which usually cover paid leave for the death of loved ones and other customary activities like marriages. Organizations that provide better pay and benefits for employees are known to perform better.
Ae-Choi, S. and Min, J., n.d. 1st ed. Lee International Law Group.
Jung, M. and Lee, J., 2009. Mind the Gap: South Korea Employee Perspective. 1st ed. [ebook] The Sloan Center. Available at: http://www.bc.edu/content/dam/files/research_sites/agingandwork/pdf/publications/MTG_SKorea_Employee.pdf [Accessed 24 Sep. 2016].
Globalization Partners, 2016. South Korea — Employer of Record / PEO — Globalization Partners. [online] Globalization Partners. Available at: http://www.globalization-partners.com/countrypedia/south-korea-employee-leasing-peo-service/ [Accessed 24 Sep. 2016].