POSCO, the world’s fourth-largest steelmaker, signed an agreement with its trade union to freeze employee salaries this year, extend retirement age to 60, apply the wage peak system more broadly, reform the wage system from seniority-based to performance/job-based, and promote shared growth with its subcontracted workers.
POSCO has implemented a wage peak system which reduces wages by 10% for employees aged 56 to 58, whereas selected employees at retirement age can work as contract workers until the age of 60. However, according to the agreement, with retirement age being extended to 60 from next year, employees aged 56 will receive 90% of their peak wage, employees aged 57 will receive 80%, and employees aged 58 to 60 will receive 70%.
POSCO, which has been implementing its wage peak system since 2011, is expected to be a good example of cooperation between labor and management, since it autonomously concluded an agreement covering the major issues in the Tripartite Agreement on Structural Reform of the Labor Market (18 September): enhancing the wage peak system, reforming wage systems, and freezing wages of regular workers, etc. It has also provided a model for employment security for older workers and job creation for young people.
In addition, POSCO reached agreement with its union to use a performance/job-based wage system, instead of the existing seniority-based system, from 2017. To do this, POSCO agreed to run a labor-management task force with external specialists from the Q4 2015.
POSCO also announced plans to continue hiring the 6,400 new workers as previously declared, despite its ongoing contingency management.