Thursday, April 2, 2020
Choi Kyoung-hwan Says Wage Peak System Necessity, Not Choice
Policy Necessity
Choi Kyoung-hwan Says Wage Peak System Necessity, Not Choice
  • By Jung Min-hee
  • August 6, 2015, 03:15
Share articles

Finance Minister Choi Kyung-hwan speaks at a meeting of economic ministers in Seoul on July 2, 2015.
Finance Minister Choi Kyung-hwan speaks at a meeting of economic ministers in Seoul on July 2, 2015.


Choi Kyoung-hwan, the deputy prime minister for economic affairs and the Minister of Strategy and Finance, has urged public institutions to introduce the wage peak system as soon as possible.

"Among four structural reforms, the wage peak system is a core task applicable to the labor and public sectors," stressed Deputy Prime Minister Choi. He said, "This is not a choice but a necessity." His remarks were made in a meeting to check current issues of public institutions in the Gwacheon government complex on Aug. 5.

Choi explained, "The wage peak system is not the only way to resolve the youth unemployment crisis, but it can be a next-best alternative," adding, "The wage peak system for public institutions is different from previous measures in the sense that it aims to create new jobs by saving resources." He went on to say, "The system is significant in that it tries to offer regular jobs to young people without imposing a burden on the public."

Among 316 state-run organizations, 11 have introduced the system, including Korea Power Exchange, Korea Southern, Southeastern, and Western Power, and the Korea Elevator Safety Technology Institute. Another 315 public institutions are also discussing introducing the system or preparing to come up with a plan to do so.

The government is planning to encourage public organizations to complete the introduction of the wage peak system by the end of Aug. and to implement the system starting Jan. 1, 2016. With the retirement age extending to 60 starting in 2016, youth employment will become scarcer amid a decrease in the number of retired people. Hence, the system can be interpreted as a government measure to minimize the problem.

Choi also remarked, "I urge large-scale institutions like the Korea Land & Housing Corporation and the Korea Railroad Corporation to lead the efforts in finding common ground between management and labor during Aug." His remarks can be understood in the same context of this policy direction.

The government predicts that 8,000 jobs will be created over the next two years through the introduction of the wage peak system by public institutions. Related to this issue, Seoul has included the cost of the system to a supplementary budget, and reflected 12.3 billion won (US$10.5 million) in the form of funding that disburses 5.4 million won (US$4,618) per person for 2 years to organizations that hire young people.

In the meantime, the deputy prime minister noted, "As far as I know, KEPCO Engineering & Construction Company [KEPCO E&C] is actively seeking to create jobs for youth," asking other organizations to make an effort and pay attention to youth employment.

KEPCO E&C has already introduced a stepping-stone project for job-guaranteeing employment, aggressively seeking to create new jobs for young people. The project aims to offer training opportunities to small and mid-sized partner companies and to provide support for them so that those companies can hire 600 people over the next 2 years. The number of job-guaranteeing internships or those who will get preferential treatment after the end of their internship is expected to grow from 700 to 1,100 a year for the next two years.