Gov`t to Stop Public Sector`s Raising of Retirement Age

The government will stop the move by state-run companies and agencies to raise their staff retirement age by introducing the peak salary system.

An across-the-board extension of the retirement age for all employees is feared not to just disrupt the government’s plan to reduce payroll in the public sector, but could negatively affect the hiring of young staff.

The Strategy and Finance Ministry said yesterday that it will prepare a standard model of the peak salary system. The model will be selectively applied to staff according to personnel demand, career and level of vocational skills, instead of blindly raising or guaranteeing the retirement age of all staff without exception.

Under the new model, public companies will be urged to institute retirement through incentives and voluntary resignations instead of applying the peak salary system of extending or guaranteeing the retirement age in return for less pay.

A ministry official said, “There is no problem with the raising of the retirement age through the peak salary system, but if the retirement age is extended for all staff, it could reduce the hiring of younger entry-level employees.”

The government will proactively recommend that the public sector to adopt the model as soon as it devises one for the peak salary system. As such, KEPCO, which will effectuate a peak salary system in July, will likely be subject to the new system.

turtle@donga.com