Business (Wire)

Over 90 pct of public firms adopt wage peak system

Yonhap News
Written by Yonhap News

SEOUL/SEJONG, Nov. 4 (Yonhap) — More than 90 percent of public corporations and organizations have adopted the wage peak system as the government pushes for broad social and labor reforms, the finance ministry said Wednesday.

Out of the 313 public sector corporations, 287, or 91.7 percent, have reached agreements with workers to introduce the novel wage system as of Tuesday, according to the ministry.

All 30 state-run corporations and 86 quasi-governmental organizations have made the switch. Of the 197 miscellaneous agencies and institutes, 171 have made the transition, it said.

The government-led wage peak system pushes the retirement age of workers back, giving them greater job security. The same people benefiting from this, on the other hand, must accept lower wages just before retirement, with the money saved used to hire new employees.

Boosting employment for young people has become a top priority for the Park Geun-hye administration, since youth unemployment is roughly three times higher than the national average.

The finance ministry said the average period of wages being affected stood at 2.5 years.

It said with the money saved by the 287 companies, 4,211 new jobs will be created in the new year.

The ministry said that while most public sector workplaces have been cooperative, some large state-supported laboratories and hospitals have been slow to make the transition.

“Some labor unions have been demanding an extension of the retirement age past 60, which is holding up progress,” the ministry said. “Every effort will be made to get the remaining 26 institutes to join as soon as possible.”

   The finance ministry has urged public sector companies to accept the wage peak system by the end of October.

Besides prodding the public sector, the government has been encouraging private companies to follow suit.

A large number of affiliates belonging to the country’s biggest family-run conglomerates, such as Samsung, Hyundai Motor, SK, LG and Lotte, have already said they will adopt the system.


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