Mid-sized Companies Warn "Perception of Issues with Wage Peak System May Lead to Labor-Management Conflicts"

Companies Following Government Guidelines Face Growing Litigation Risks and Burdens

Photo by Yonhap News

The ripple effects of the Supreme Court ruling declaring the wage peak system invalid are now sweeping through the mid-sized enterprise sector. The mid-sized enterprise community is immediately concerned about the confusion at workplaces that have implemented the wage peak system. The industry shares a common perception that ongoing lawsuits could escalate conflicts between labor and management.

On the 10th, Park Yang-gyun, Head of Policy at the Korea Federation of Mid-sized Enterprises (KFME), stated, "In industrial workplaces, the court ruling is perceived as indicating a fundamental problem with the wage peak system itself," adding, "Especially labor unions will raise this issue during wage negotiations, which could lead to labor-management conflicts."

Although the Supreme Court ruling is limited to the ‘retirement age maintenance type’ among many types of wage peak systems, the industry explains that related conflicts could arise regardless of the type. Park noted, "If you delve into the details of the ruling, there are grounds for debate, but the way it is accepted on the ground is different," and added, "Companies introduced this system following government guidelines, but if lawsuits are filed against companies that have applied it so far, the companies face increased litigation risks and burdens."

Park’s concern that labor-management conflicts caused by the wage peak system could become very serious is already becoming a reality. Lawsuits are being filed one after another in various places. Park said, "From a company’s perspective, if sued, they have to bear the costs, and the uncertainty has increased."

In response, the mid-sized enterprise sector has expressed the position that discussions to improve and expand the wage peak system?as an efficient measure to enhance overall industrial productivity and create youth jobs, which are fundamental elements of sustainable development?should be expedited. Especially amid the ongoing economic downturn caused by the COVID-19 pandemic and mounting global inflationary pressures, it is emphasized that clear standards must be established to prevent confusion related to the wage peak system from causing additional wage burdens and productivity declines for companies.

Park stated, "First of all, uncertainty must be resolved," adding, "While it is not appropriate for the law to regulate every detail, given the current situation, uncertainty exists, so clear grounds and regulations should be established to reduce this uncertainty."

This content was produced with the assistance of AI translation services.