MOEL releases its Analysis of the Current Situation & Effect of Introducing a Wage Peak System
The Ministry of Employment & Labor (MOEL) released its analysis of the current situation & effect of introducing a wage peak system’ on 19 March, which reveals that workplaces with wage peak systems have greater employment security and are better able to create jobs (including for young workers) than workplaces without wage peak systems.
According to the MOEL analysis on 9,034 workplaces, 9.4% (849 workplaces) of the responding workplaces have introduced a wage peak system: 13.4% of workplaces with 300 or more employees, and 7.9% of workplaces with fewer than 300 employees. Of the 8,185 workplaces without wage peak systems, 2,273 of them (27.8%) have plans to introduce such systems. The rate of workplaces with plans to introduce a wage peak system is higher at larger companies.
Introduction of a wage peak system has a positive influence on employment security. In 2014, the number of retirees stood at 39.1% out of total employees at workplaces without wage peak systems, whereas only 16.1% at workplaces with wage peak systems. The rate of retirees aged 50 or above is 23.1% at workplaces without wage peak systems and 18.3% at workplaces with wage peak systems, which implies that employment security for older workers is higher at the workplaces having introduced wage peak systems.
The analysis also shows that there are more retirees in workplaces without wage peak systems and more newly hired workers in workplaces with wage peak systems. The rate of new employees aged 30 or below is higher at workplaces with wage peak systems (50.6%) than at workplaces without (43.9%). Workplaces introducing wage peak systems are more likely to have the financial capability to create jobs.
The MOEL explains “wage peak systems should be actively introduced in workplaces to create an environment where both younger and older workers can co-exist at a time when the mandatory retirement age extension to 60 is poised to take effect next year”, and that “in this regard, the government is planning to support, through consultations and negotiations, labor and management in introducing a wage peak system at workplaces with 300 or more employees. For those workplaces where labor and management agree on the introduction of a wage peak system, the government will strengthen its support including guidance publications and professional consulting.”