The SK Group is planning to have all its affiliates adopt the new wage peak system starting next year, while extending the retirement age of its employees.
According to industry sources on Aug. 17, the SK Group has introduced the wage peak system in its major affiliates, including SK Hynix, and will extend it to the remaining affiliates through collective agreements with unions.
Currently, around 90 percent of the SK Group's affiliates have already implemented the wage peak system or will adopt it. Under the wage peak system, employees accept a reduced salary in exchange for working for an extended period of time until retirement. SK Hynix and SK Telecom will decrease the salary by 10 percent from the age of 58 and 59, respectively, from the previous year. Affiliates of SKC and Walkerhill implemented the system a few years ago. Also, SK Innovation and SK Networks have already set the retirement age at 60.
Regarding this, local private and public companies with more than 300 employees need to extend the retirement age to 60 from next year, according to the “Act on Prohibition of Age Discrimination in Employment and Aged Employment Promotion.” The South Korean government is currently reforming the labor sector by urging local conglomerates to join the system, claiming that the money saved by this wage arrangement can be used to hire new employees, leading to increased job security for both the younger and older generations.
Major South Korean conglomerates are actively cooperating with the government’s efforts. The Hyundai Motor Group has recently announced its adoption of the wage peak system. Samsung Group and LG Group have already implemented the system at some of their business divisions, and will gradually adopt it at all of its affiliates. The Lotte Group and POSCO will follow suit. The decision of the SK Group can also be interpreted as its will to cooperate in the government’s labor reform.