More and more business groups are adopting the wage peak system in South Korea, as sought by the government in a bid to create new jobs by slicing existing payrolls.

Doosan Group, the country’s 13th-largest business conglomerate, Thursday announced that all its 22 units will implement the new wage peak system next year. It has become the first conglomerate to introduce the program in all affiliates under the agreement between management and unions.

The wage peak system refers to the gradual reduction of salaries after a certain age in exchange for extending the retirement age. Severance payments, based on the average wage of the last three months from retirement, will naturally be lower, thus saving costs for employers. The Korea Employers’ Federation claims that the adoption of the program at all workplaces will enable companies to create 182,339 jobs for young people in four years.

“We have adopted the wage peak system since 2013 at some of our affiliates and have gradually extended the program to nearly all our affiliates. Recently, we received the document of consent from all workers at the remaining four subsidiaries,” a Doosan spokesman said.

Under the program, the retirement age of all workers is being extended to 60 years old. In return, salaries will decrease by 20 percent when employees turn 58 and by 30 percent when they reach 59.

“The wage peak system has its benefit of not only guaranteeing job security for a longer period of time for individual workers, but also creating new jobs with reduced labor costs. This was welcomed by both workers and the management,” the spokesman said.

The adoption of this system has been the main focus of the Park Geun-hye government in order to tackle the high youth unemployment rate. Progressive lawmakers have been suggesting bills mandating youth employment at large corporations, but have faced resistance from businessmen reeling under the economic slowdown.

About 47 percent of the top 30 conglomerates in the country have partially adopted the wage peak system, including global powerhouses such as Samsung, Lotte, POSCO, GS and others, according to the Segye Ilbo newspaper.

However, some of them implemented the system in haste, without the workers’ consent, which could lead to management-labor rifts in the upcoming negotiation season.

Hyundai Motor Group, the country’s second-largest conglomerate, announced last week that it will implement the wage peak system in all its affiliates next year, boasting that this would lead to more employment, thus contributing to the nation’s economy.

But it was soon revealed that the plan was unilaterally delivered, and it created a stir among the unionists who said the company has already introduced a de facto wage peak system by freezing the wages of aged workers.

Unionists at Kumho Tire on Monday held a strike over a slew of issues including the management’s unilateral decision to adopt the wage peak system.

“There needs to be a lot of communication from both sides to smoothly adopt this system,” a labor union insider said.

By Bae Ji-sook(baejisook@heraldcorp.com)