Long Way to Go

Labors are demonstrating against the wage peak system.Only 42.7% of the surveyed 300 South Korean firms with at least 300 regular employees have adopted salary peak system so far.
Labors are demonstrating against the wage peak system.Only 42.7% of the surveyed 300 South Korean firms with at least 300 regular employees have adopted salary peak system so far.

 

The Korea Chamber of Commerce & Industry recently conducted a survey with 300 South Korean firms that are subject to deferred retirement each with at least 300 regular employees.

It found that only 42.7% of them have adopted salary peak so far and only 23.7% of the 300 firms have reformed their seniority wage systems into a job-specific or merit-based pay system. No less than 46% of the respondents answered that they have yet to adopt salary peak or reform their wage systems.

The Act on Prohibition of Age Discrimination in Employment and Aged Employment Promotion was amended in April 2013. According to it, a retirement age of 60 has become mandatory in firms with 300 or more employees since the beginning of this year and is scheduled to be expanded next year to cover the others. 

Many of the respondents answered that unprepared retirement age extension is posing a burden on their business management. Specifically, 67.3% of the firms mentioned that their business activities are being affected by the extension of the retirement age. 53% of them mentioned an increase in labor cost and the answer was followed by personnel management difficulties such as reduced new employment (23.7%) and a decline in productivity attributable to an increase in the ratio of aged employees (21.7%). In particular, 42.3% of the firms said that they are being compelled to reduce new employment due to the retirement age extension.

 

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