Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
POSCO freezes employee salaries
By Lee Hyo-sik
Kwon Oh-joon, POSCO chairman
By Lee Hyo-sik
POSCO, the world’s fourth-largest steelmaker, has decided to freeze the salaries of its workers this year and use the money to purchase gift certificates to help boost the profits of small merchants at traditional markets.
The company also said it will set up a task force to overhaul its performance-based compensation system and hire 6,400 entry-level workers as planned, despite its ongoing downsizing drive.
It will extend its peak wage system, which cuts an employee’s salary at a certain age in return for job security, as the legally binding retirement age rises to 60 in 2016 from the current 58.
“Both labor and management decided not to raise wages this year as part of efforts to overcome the ongoing difficulties, and share growth with business partners and local communities,” a POSCO spokesman said.
“We expect to save about 13 billion won from the wage freeze. We will use the money to purchase traditional market gift certificates, worth 13 billion won, and give them to our employees and those of our business partners,” he said.
To help alleviate the country’s deepening youth unemployment, the steelmaker plans to recruit 6,400 young jobseekers this year as planned.
“Although we have been disposing of some of our affiliates and downsizing operations across the board, we decided to hire as many university graduates as we can,” the spokesman said. “Also, we will recruit 300 interns from university students every year for the next five years, in cooperation with our business partners, and hire those who perform well after they graduate.”
With the retirement age going up to 60 next year, POSCO will extend its peak wage system to join in the government campaign, which seeks to provide older workers job security and create more positions for young jobseekers.
With the mandatory retirement increasing by two years, both labor and management at POSCO agreed to revise the system accordingly.
POSCO employees now enter the peak wage program, which was introduced in 2011, when they are 56. Their wages decline by 10 percentage points annually for two years until they retire at 58.
In 2016, POSCO employees aged 58-60 will continue to remain on the payroll under the peak wage system. But in return, workers will receive 70 percent of salaries given to them when they were 56.
In addition, the steelmaker plans to introduce a performance-based wage system in 2017.
“To draw up a workable scheme, we will establish a task force including labor experts,” the spokesman said. “All these efforts will provide older workers with better job security and create much-needed opportunities for young jobseekers. POSCO will continue to fulfill its corporate responsibility by sharing growth with business partners and creating jobs for young people.”