More than 90% of state-run firms on ‘peak wage’ system

More than 90 percent of state-run companies and organizations have adopted the so-called “peak wage system,” through negotiations with their unions, the Finance Ministry said on Wednesday.

Out of 313 government-controlled bodies in the country, 287 or 91.7 percent have adopted the system that gradually cuts salaries of senior employees years before retirement.

The controversial system, which the government is pushing the private sector to follow, is part of President Park Geun-hye’s efforts to create more jobs for young jobless people, amid high youth unemployment rates which are between 8 percent to nearly 12 percent. In return, the government has raised the legal retirement age to 60, from currently 58 for government officials.

The adoption of the system is expected to generate at least 4,200 new jobs, the Finance Ministry said.

The remaining 26 organizations, including four state-run hospitals, are struggling with unions over an agreement, the ministry said.