S. Korea to take reforms on labor market
韓國將進行就業市場改革

In South Korea, a tripartite committee comprising labor, management and government representatives has agreed on reforms to the country's rigid labor market. The move is aimed at increasing labor flexibility where job creation is a priority despite the economic slowdown.

The agreement comes after a year of tough negotiations, and it still faces stiff opposition.

More than 3,000 union members joined a demonstration against the labor reform proposals. Despite opposition, a tripartite committee unanimously approved an overhaul of South Korea's labor market.

The hottest issue is the government's drive to adopt a so-called 'peak wage' scheme, which would cut wages of employees edging closer to retirement but extend the retirement age from 55 to 60.

The move is aimed at creating more jobs for young people at a time when the country is struggling with youth unemployment, standing at 10.3 percent in the first quarter. It is the highest rate in 16 years.

More than a hundred state-run corporations have agreed to adopt the scheme, already common in Japan. Energy giant Korea Hydro & Nuclear Power is one of them.

Private sector businesses, including Samsung Electronics and Hyundai Motors, have introduced the peak wage system, too. Workers are worried the change will threaten their job security and do little to help the faltering economy.

There is little doubt reform is necessary, but some experts say more will need to be done to satisfy the workforce.

The proposals, which would also make it easier for companies to lay off under-performing workers, await parliamentary approval.

The government hopes they will pass by the end of the year, but it could take much longer for the changes to be accepted.