Labor groups, Justice Party push back against bill to pay bonuses in local currency vouchers

Labor groups and the Justice Party on Thursday pushed back against a bill by a ruling party lawmaker that would allow companies to pay bonuses and performance-based pay in local currency vouchers, saying it undermines the principle that wages must be paid in cash.

Democratic Party of Korea lawmaker Park Min-gyu introduced an amendment to the Labor Standards Act on Wednesday that would allow a portion of wages to be paid in "local currency vouchers or other non-monetary forms designated by presidential decree" when a collective agreement provides for it or a worker gives explicit consent.

Park said the bill aims to "create a virtuous cycle in which corporate profits and the bonuses and performance pay that follow contribute to revitalizing local economies." He also cited the limited economic impact on local communities from foreign workers remitting a large share of their wages abroad as part of the legislative rationale.

The Federation of Korean Trade Unions (FKTU) issued a statement Thursday calling for the bill's withdrawal, saying "workers' wages are not a tool for policy goals but a right that must be fully guaranteed as compensation for labor." The federation said the amendment "undermines the principle of direct wage payment."

The FKTU said that while the bill requires workers' "explicit consent," in practice "coerced consent can occur in workplaces due to the hiring process, performance evaluations and organizational culture."

It added that bonuses and performance pay are "fair compensation for results workers have produced," and that steering workers toward specific spending patterns or restricting where they can spend their pay "risks undermining the very nature of wages."

The Korean Confederation of Trade Unions (KCTU) also urged the bill's withdrawal.

The KCTU said that within the power imbalance of an employment relationship, "consent" is difficult to treat as a genuinely free choice, and that local currency vouchers — restricted by location and expiration dates — "could in effect amount to a real-wage cut."

The KCTU also said that singling out foreign workers' overseas remittances "could be seen as an attempt to treat wages differently based on nationality," and called on the National Assembly to withdraw the amendment and "present effective alternatives for local economic development while upholding the principle of monetary wage payment."

The Justice Party also issued a statement Thursday calling for the bill's immediate withdrawal, describing it as "an absurd piece of legislation that directly contradicts the intent of the Labor Standards Act, which requires wages to be paid in currency to protect workers' livelihoods."

The party said that with union membership at only around 10 percent, employer "consent" is likely to become coercion and pressure. It added that while large companies may avoid the law's application, "the side effects will ultimately fall on workers at small and medium-sized enterprises without unions."

The Justice Party said that "if workers need local currency, they can simply buy it themselves with the wages they receive in cash," and that "restricting vulnerable workers' freedom to choose how their wages are paid in the name of revitalizing local economies cannot be tolerated."