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Rep. Sim Sang-jung of the minor opposition Justice Party proposed a bill in June that calls for limiting corporate executives' pay.
The bill, the Korean version of the so-called fat cat laws, sets the highest wage at 30 times the minimum wage. Given that this year's minimum wage is 6,030 won an hour, the highest executive salary must not exceed 450 million won (about $380,000). The bill also envisions restricting the salaries of high-ranking public servants, including lawmakers, not to exceed five times the minimum wage and limiting those of state enterprise executives to 10 times the minimum.
The bill triggered a stir at first because of the shocking nature of its content. But there has been little progress in passing the bill at the National Assembly since then, amid criticism that it is unrealistic with salary ceilings that are too strict.
A recent report on remunerations paid to top management, including conglomerate owners, however, shows the need to bring the bill back to life at any cost. Simultaneously the report serves the purpose of recalling how serious Korea's income polarization is now.
According to the report released by the Financial Supervisory Service last week, GS Group Chairman Huh Chang-soo was the highest-paid executive in the first half of the year, receiving 5.2 billion won. He was followed by Hyundai Motor Group Chairman Chung Mong-koo with 4.2 billion won and Hanjin Group Chairman Cho Yang-ho with 4.1 billion won. Professional entrepreneurs such as former LG U+ Vice Chairman Lee Sang-chul and Samsung Electronics Vice Chairman Kwon Oh-hyun also pocketed nearly 3 billion won in the six-month period.
Given that the average annual salary of wage earners remained at about 33 million won last year, the annual pay given to Huh this year ― which could be roughly estimated at 10 billion won ― would be 300 times the average salary. No doubt, the wage gap must be too big.
The magnitude of remunerations paid to top management rings hollow to ordinary people, considering that millions of people have yet to receive even the stingy minimum wage in Korea. To be sure, lawmakers have ample reason to renew efforts to pass the fat cat bill.
There are, of course, concerns that corporate activity might weaken and brain drain might accelerate. It's also doubtful if limiting wages in the private sector makes sense.
Even so, it's long overdue for our society to listen to calls for addressing the ever deepening income polarization. The National Assembly needs to embark on mitigating our income inequality by giving a hard look at the proposed bill.
