State housing developer LH adopts wage peak system

SEJONG, Aug. 28 (Yonhap) -- State-run housing developer Korea Land & Housing Corp. (LH) decided Friday to introduce the wage peak system for all employees in a move that will likely create more jobs for young people.

LH, headquartered in Jinju, 434 kilometers south of Seoul, said its board of directors approved the agreement reached by its management and labor.

LH is the latest public company to adopt the wage peak system as Seoul has been pushing state-run companies and organizations to accept the system by the end of the year as part of its broader efforts to reform the public sector and the country's labor market.

Under the scheme, the retirement age of all workers will be pushed back from 59 to 60. Employees that benefit from this arrangement, however, will accept gradual pay cuts when they reach the age of 56 or 57 depending on their status within the company, so at the time of leaving LH, their earnings will be 70 percent of what they got at their peak.

With the passage of the new system and money saved in personnel expenses, LH will be able to hire some 120 new employees in 2016, LH said.

The agreement between LH's management and union is deemed important because it is not only the nation's largest public firm by workforce, but it has two separate unions that represent the land and housing arms of the company.

"LH's decision is likely to prompt other public corporations to follow suit," an LH spokesman said.

Earlier this week, the government said that of the 316 public sector companies, a little over 40 are expected to adopt the wage peak system by the end of August, with the remainder being prodded to do so within the year.

Policymakers warned that in its annual performance review, the government will give low marks to public companies that don't adopt the system, withholding bonuses and other benefits.

yonngong@yna.co.kr
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