Hyundai Motor Group plans to adopt a peak-wage system that will trim wages of existing employees to enable the group’s affiliates to engage more young workers.
The umbrella group of South Korea’s biggest carmaker Hyundai Motor Co. will extend the retirement age of workers at all affiliates to 60, reduce their wages and use the savings to hire more young employees starting in 2016, the group said in an e-mailed statement. The magnitude of the pay cuts for senior employees will be decided in negotiations between companies and their labor unions.
Hyundai’s decision supports government efforts to increase youth employment in a country where the jobless rate for those under 30 is almost three times greater than the general population. President Park Geun Hye and Finance Minister Choi Kyung Hwan have encouraged the nation’s companies to adopt new wage systems.
“We will push to increase young workers’ employment by hiring 1,000 more annually,” Hyundai Motor Group said. “The decision to implement the peak-wage system and expand young adults’ employment was made to fulfill our social responsibility of improving job security and to obtain talented workers.”
Unions already have voiced opposition to the peak-wage system, which runs counter to cultural traditions of basing pay on tenure and age, rather than performance.
The jobless rate for Koreans aged 15 to 29 was 10.2 percent in June, almost three times the 3.9 percent for overall population. Youth unemployment reached 11.1 percent in February, the highest since 1999, according to government data.