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The Korea Herald
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THE INVESTOR
March 29, 2024

Samsung

Samsung to adjust wage system implemented during Park gov’t

  • PUBLISHED :June 15, 2018 - 13:55
  • UPDATED :June 15, 2018 - 17:08
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[THE INVESTOR] Samsung Electronics has recently decided to adjust the so-called wage peak system to cut to 5 percent the annual salary reduction rate of executives and employees during the last five years before they retire, according to industry sources on June 25.

Currently, the reduction rate is set at 10 percent.




The move is aimed at preventing seasoned staff in the display and semiconductor businesses from moving to competitors, including those in China.

Samsung recently held meetings with a group of executives and employees to fix some of the wage peak system rules, first adopted in 2014 in accordance with a National Assembly bill passed in 2013.

The previous Park Guen-hye government made a push to extend the retirement age from 55 to 60 while cutting the paycheck each year for the last five years before retirement.

The scheme was aimed at allowing employees to work longer, but the severance payment, based on the average wage of the last three months from retirement, is naturally lowered. By slicing the existing payroll, the government tried to create new jobs. Samsung was one of the first conglomerates to implement the system.

“The previous reduction rate of 10 percent was not higher than those adopted in other companies, but Samsung has reduced the rate further this time,” an industry source closed to the matter said.

Experienced Samsung engineers and managers are often coveted by Chinese electronic companies, which are trying to attract skilled Korean display and chip experts with fat paychecks.

SK hynix, the No.2 chip company in Korea, extended the retirement age from 57 to 60 since 2015, and reduces the paycheck by 10 percent at 58, 19 percent at 59, and 27 percent at 60.

By Kim Young-won (wone0102@heraldcorp.com)

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