By Yoon Ja-young
Lee, a manger at an oil company, entered the peak wage program last year. He is getting 80 percent of the salary he used to get, but he is happy with the system as the company extended his retirement age by two years.
“Though I am nearing 60, I think I am still young and I can work. I am happy that I can work for two more years with the adoption of the peak wage system,” he said.
The Ministry of Strategy and Finance announced the plan to expand peak wage program at state-run enterprises, Thursday. They will introduce the program to hire more young people with the labor costs they have saved. It is expected to create 6,700 more jobs over the next couple of years.
In the peak wage system, the employee agrees to a reduced salary from a few years ahead of retirement, in return for guaranteeing job security and extending the retirement age.
The program is a win-win for employees and the government as well as businesses.
Employees are happy to earn money for a few more years and prepare thoroughly for life after retirement, while the companies are glad to continue hiring experienced workers at lower costs.
The government is also encouraging it as it provides jobs for the elderly in a society that is rapidly aging.
“The program is essential to ease the labor cost burden while increasing jobs for young people,” the ministry said in a press release. It added that only 18 percent of state-run enterprise and government organizations have adopted the system.
As the official retirement age will be extended by one year to 60 next year, the adoption of the peak wage system is more than needed, the government explained.
As the number of those retiring at state-run enterprises is expected to decrease by 3,367 next year with the extension of the retirement age and the introduction of the system, the government expects around 6,700 more people could be hired from 2016 to 2017.