Yoon Ja-young is in charge of articles translated by a generative AI system and edited by The Korea Times. She is interested in improving the newspaper through AI.
BOK chief tells firms to hire young workers
Bank of Korea Governor Lee Ju-yeol, center, poses with heads of banks before holding a financial coordination meeting at the central bank’s main office in Seoul, Friday. From left are Korea Exchange Bank CEO Kim Han-jo, NH Bank CEO Kim Ju-ha, Shinhan Bank CEO Cho Yong-byeong, Lee, KB Financial Group Chairman Yoon Jong-kyoo, Citibank Korea CEO Park Jin-hei and Standard Chartered Bank Korea CEO Park Jong-bok. / Yonhap
By Yoon Ja-young
By Yoon Ja-young
Bank of Korea (BOK) Governor Lee Ju-yeol wants financial firms to carry out peak wage programs to provide more job opportunities for young jobseekers.
He expressed concern about the high jobless rate among young adults, which is expected to rise further with the extension of the retirement age next year.
“Employment is a big issue,” Lee said at a meeting with the heads of commercial banks Friday. “There is concern that the problem of unemployment for young people may worsen for two or three years as the official retirement age will rise to 60 next year.”
The government is extending the retirement age to 60 from 58, amid the rapid aging of Korean society. This will force employers to stop or reduce employing rookies.
Lee said unemployment for young people was already serious. According to April data from Statistics Korea, the overall unemployment rate was 3.9 percent. But the rate for those between 15 and 29 was 10.2 percent, the highest April figure since 1999, when Statistics Korea started compiling the data.
Oh Ho-young, a researcher at the Korea Research Institute for Vocational Education and Training, said the labor market should be more flexible.
“The rigid labor regulation leads to the expansion of overseas investment coupled with a decrease in foreign direct investment, intensifying the conflict of interest between old and younger workers.”
Lee suggested that banks hire more young workers by adopting peak wage programs, where employees agree to a reduced salary from a few years before retirement, in return for guaranteeing their job security and extending their retirement age.
The government has been promoting the program, figuring that businesses can increase the hiring of young people with the money saved on senior workers. State-run enterprises have been the first to adopt the program.
Lee said the BOK would also adopt the peak wage program from July to expand the hiring of youths with the money saved.
“I think it is necessary for financial companies to increase hiring by cutting costs through peak wage programs, as well as early voluntary retirement programs,” he said.
He cited KB Kookmin Bank as an example. The bank said last week that it would launch a massive voluntary retirement program for about 5,500 of its employees.
Lee said this could be a good example of dealing with youth unemployment before the retirement age extension.
KB Financial Group Chairman Yoon Jong-kyoo said the bank tried to seek a win-win strategy for all.
“We plan to expand the hiring of rookies by 40 percent, compared with last year,” he said. “As the tight job market for young people is a serious social issue, we think it is the right direction to go.”