[THE INVESTOR] South Korea’s top financial regulator urged the financial firms to encourage the performance-linked pay system for employees.

“A board of directors representing shareholders should demand a change (in the pay mechanism), wisely judging what’s important in the growth and development of their companies,” Yim Jong-yong, Chairman of the Financial Services Commission, said.

He was speaking at a meeting with the heads of public financial firms here on the government’s drive to introduce a full-scale merit salary scheme in both the public and civilian sectors.

Yim’s remarks came in response to worries about possible negative effects from any radical shift in the nation‘s pay program traditionally based on seniority and the length of services.

In fierce protest against the government’s campaign, the Korean Financial Industry Union, a major umbrella union of bank workers nationwide, staged a general strike in September.

The union says such a performance-oriented approach will only undermine the quality of services and lead to damage to customers.

It plans to launch more collective actions next month.

The FSC chief, however, said it‘s inevitable that the pay-related reform will be carried out to enhance the competitiveness of local financial firms.

(theinvestor@heraldcorp.com)