Dozens of public corporations have decided to adopt a wage peak system in line with the government’s efforts to make the rigid local labor market more flexible, the finance ministry said Monday.
Out of the total 316 public companies and organization, 24 like Korea Electric Power Corp. and Korea Deposit Insurance Corp. have introduced the novel wage system as of Monday, with an additional
19 set to follow suit by the end of this month, according to the ministry.
The peak wage system calls for the retirement age of workers to be pushed 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 to be used to hire new employees in a kind of work sharing arrangement.
The move is expected to make it possible for more young people to be hired.
Boosting employment for young people is critical since the jobless rate of people between 15 through 29 stood at 9.4 percent in July, much higher than the 3.7 percent tallied for the entire country.
“Public support, coupled with various incentives and direct subsidy promises, is pushing companies and organizations to accept peak wages,” the ministry said.
The government has made clear that it wants all public companies to adopt the system within the year, warning corporations that do not comply will be at a disadvantage when it comes to raising wages for workers next year.
The finance ministry said if around 40 corporations adopt the wage peak system, it can help create more than 1,300 new positions.
Besides the public sector, the government is encouraging private companies to adopt the wage peak system, so they too can hire more workers, without worrying too much about a spike in personnel-related expenses. (Yonhap)
