Experts warn of job, fiscal risks in ‘fair allowance’ plan

“The government’s plan to introduce a “fair allowance” for short-term public sector workers is drawing criticism from economists and administration experts, who warn that the policy could distort the wage system, strain public finances and end up shrinking jobs it is meant to protect. Announced at a Cabinet meeting on April 28, the initiative would grant an additional lump sum payment to fixed-term workers employed at state-funded organizations, whose contracts are shorter than a year, with higher rates applied to shorter contracts to reflect their greater employment insecurity. The allowance would be pegged to a reference “living wage” of 2.54 million won ($1,730) per month, set at 118 percent of the legal minimum wage. The rationale is to tackle the widespread practice of repeatedly hiring workers on 11-month contracts to avoid paying severance and granting them the other benefits associated with permanent positions. But some critics believe the measure is built on shaky conceptual and institutional grounds. Lee Ji-man, an industrial relations expert at Yonsei University, sai

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