Half of S. Korean big companies adopt wage peak system
Xinhua, July 1, 2015 Adjust font size:
Nearly half of South Korea's big companies have already adopted the wage peak system, under which salary for workers begins to reduce from a certain age, a government report showed Wednesday.
Among 378 major affiliates of top 30 conglomerates, 177 companies, or 47 percent of the total, have introduced the system, according to the Ministry of Employment and Labor.
South Korea had announced a plan to make the retirement age of 60 mandatory from 2016, but industrial circles opposed to it for higher labor costs.
The wage peak system would allow companies to reduce wages for workers of a certain age, many of them from 56 years old, to lower labor costs against the extended retirement age.
The labor world protested against the system as the fallen wage would reduce severance pay, which is calculated based on wages of the last three years before retirement.
More than half of top 15 conglomerates, including Samsung and Hyundai, have adopted the wage peak system or plan to introduce it from next year.
Under the system, wages could fall to 40 percent of the salary of the last year when it peaked. Endi