Korean Air has launched a labor-management council to discuss extending the retirement age and improving the wage peak system. Korean Air introduced the wage peak system when a law mandating a retirement age of 60 took effect in 2016, but some employees mounted strong resistance, and labor-management conflict has continued ever since.
According to an aviation industry official on the 10th, Korean Air recently formed a council to discuss extending the retirement age and improving the wage peak system and has held two meetings through the day.
Under Korean Air's current wage peak system, wages are reduced starting at age 57, with employees receiving 65.61% of their previous pay at the statutory retirement age of 60. Wages by age are ▲57: 90% ▲58: 81% ▲59: 72.9% ▲60: 65.61%.
This plan was introduced through labor-management negotiations and agreements, but employee backlash has continued. Thirty-two Korean Air employees filed a damages suit, saying the company, despite the legal extension of the retirement age, cut wages discriminatorily based on age and reduced their real pay.
Employees who filed the suit argued that the wage peak system caused up to 70 million won in losses per person, but the court did not accept the claim, and the Supreme Court also dismissed it in September. The court ruled that because the retirement age was extended and total wages increased, it could not be seen that employees suffered losses.
In the aviation industry, the court sided with management, but Korean Air is seen as having set up the council to initiate a preemptive dialogue, taking into account ongoing backlash against the current system and discussion in politics about extending the retirement age.
Because Korean Air uses a seniority-based wage system that pays according to years of service, labor costs will inevitably rise if the retirement age is extended to 65. As a result, the current wage peak system needs to be adjusted to align with the changes.
Asiana Airlines, which is set to be integrated with Korean Air, is also expected to be affected by the council's outcome. Asiana Airlines was the first among domestic carriers to introduce a wage peak system in 2015, cutting wages by 10% each year starting at age 56 so that employees receive 50% of their pay at 60.