Land and Housing Corporation introduces salary peak system from 2016

Korea Land and Housing Corporation (LH) has announced to adopt salary peak system for its entire employees from 2016. As the LH is one of the most representative state-owned companies, attention focuses on whether its decision to introduce the government-recommended system affects other state-run companies. The government has recommended to 316 public firms to introduce the salary peak system from 2016.

The company revealed that the labor and management agreed on the decision on Friday, which was approved at the Board of Directors meeting held on the same day. With the newly-adopted system, the retirement age of some 6,300 employees will increase by one year from 59 to 60. Instead, those in the senior-level position such as manager (Level-2 or higher) will see their salary decrease for four years before they retire. Ninety percent of the full salary will be paid at fourth year prior to the retirement and 70 percent will be paid for three years before they quit the company for good. In the case of junior-level position (Level 3~5), 80 percent will be paid at the first year out of three years and 70 percent for two years before they retire.

The LH plans to use the finance saved by the system in hiring some 120 new workers by 2016. “LH’s workers and the labor union are determined that the company should fulfill its social responsibility to solve the issue of so-called employment precipice as a state-owned company, based on which the LH decided to introduce the system,” said CEO Lee Jai-yeong of the company.