All of South Korean public companies have adopted the wage peak system, which delays the mandatory retirement age in exchange for decreasing wages, according to the government.

The Finance Ministry said a total of 313 state-run companies and organizations had adopted the system as part of their contribution to creating 4,411 new jobs throughout the year.

In the private sector, about half of Korea’s major conglomerates have agreed to accept the wage peak system. The wage peak system has been a bone of contention between the government, business corporations and workers. Under the system, workers are guaranteed more years of work. Yet some critics insist the system will help employers exploit senior employees at cheaper wages.

The wage peak system in Korea has gained strong support from the government as an alternative for boosting employment for young and new workers. As of September, the unemployment rate of those aged 15 to 29 stood at 7.9 percent, far higher than the 3.2 percent across age groups.


koreaherald@heraldcorp.com