The government said Tuesday it will introduce measures to allow companies to reduce or freeze wages for senior employees to help revive the stagnant economy and boost youth employment.
The ruling Saenuri Party and the government decided to push for the “pay peak” system under which companies are permitted to freeze or slash wages for employees nearing the retirement age, without consent from their employees, party officials said after a policy coordination meeting with the Ministry of Employment and Labor.
The decision was reached upon the notion that the flexible employment system could lessen labor costs ahead of increasing the retirement age to 60 next year, as well as help create more jobs for young job seekers.
Currently, companies are required to win consent from the labor union to introduce the pay peak system.
“The party shares the Labor Ministry’s principle to adopt the pay peak system to resolve the youth employment shortage,” Rep. Kwon Seong-dong of Saenuri Party told reporters after the meeting.
Still companies are required to slash wages by levels similar to those by firms that have already introduced the rule through consultation with the labor union, the lawmaker noted.
The government move to draw up relaxed labor guidelines came in line with the revision in 2013 of the aged employment promotion law, which officially lengthened the official retirement age to 60.
During the government-party meeting, Labor Minister Lee Ki-kweon also called for parliamentary cooperation in legislation regarding the labor issues of how to define regular pay, as well as reducing work hours.
Lee called for legislative efforts for these issues during the upcoming National Assembly session as early as June.
The new guidelines are expected to face resistance from the labor sector, which has claimed that the introduction of the pay peak system will only eat into workers’ wages as few employees stay on until 60. (Yonhap)
