The government has decided to implement a wage peak system for all public corporations ahead of the retirement age extension that will go into effect next year, the finance ministry said Thursday.

The wage peak system is a job-sharing measure that aims to provide job security for older employees through a gradual wage cut after a certain age. The money saved can be used to hire more young people.

The decision calls for establishing guidelines by May that will affect 316 state-controlled corporations and institutions, according to the ministry.

"The move is designed to have the public sector play a leading role on this issue so the private sector can follow suit and forge their own job-sharing programs," the ministry said.

All employees of public companies will be subject to the new arrangement, with corporations that have already switched to the wage peak system required to make revisions so their rules will conform to the latest guidelines.

In exchange for extending the retirement age by a couple of years, those that have been with corporations or institutions for the longest will be required to accept reductions in pay.

The ministry said the number of new people to be hired must be at least equal to those employees who get to stay on a few more years because of the extended retirement age.

"This can lead to an increase in employee numbers that will be permitted by the government, although the total wages given to workers must remain unchanged," an official stressed. "Each public corporation will be required to come up with ways to best meet these rules."

He said some public companies will likely introduce a wage peak system within this year, while others will have to work out details with workers and be ready to follow guidelines in the first half of 2016.

The finance ministry said that the goal is to get the public sector to hire more than 17,000 employees in 2015. (Yonhap)