Seven out of 10 Korean companies believe extending the retirement age would create significant management challenges due to seniority-based wage systems. (Image courtesy of Yonhap)
SEOUL, Nov. 6 (Korea Bizwire) – A new survey has revealed that seven out of 10 Korean companies believe extending the retirement age would create significant management challenges due to seniority-based wage systems, according to findings released on November 5 by the Korea Enterprises Federation (KEF).
The survey, conducted by Research & Research on behalf of the KEF, polled human resources managers at 121 domestic companies with 300 or more employees about their perspectives on elderly employment policies.
According to the results, 67.8% of responding companies expressed concern about the management burden of extending the retirement age.
The primary reason cited was increased labor costs due to seniority-based pay systems (26%), followed by personnel stagnation (23.2%), negative impact on youth employment (19.3%), and decreased productivity of older workers (16.6%).
The KEF noted that the peak wage system, introduced in 2013 as a cost-mitigation measure when the retirement age was set at 60, has only been adopted by 48.2% of companies with 300 or more employees.
This low adoption rate suggests that hasty implementation of retirement age extension could lead to significant adverse effects.
Regarding the continued employment system, which the Presidential Economic, Social and Labor Committee aims to reach social consensus on by the first quarter of next year, 71.9% of companies preferred a post-retirement rehiring system over other options.
The main reasons for this preference included increased employment flexibility (35.2%), ability to selectively retain workers based on expertise and preference (25.8%), and the possibility of adjusting wages according to elderly workers’ productivity (24.5%).
Companies identified several challenges in managing elderly employees, including health issues and industrial accident risks (28.9%), productivity decline (28.9%), and high labor costs (24.8%).
When asked about necessary government support for creating an environment conducive to elderly employment, companies prioritized expanded wage subsidies for hiring older workers (28.1%), tax benefits (24%), and improved procedures for modifying employment rules to restructure wage systems (22.3%).
M. H. Lee (mhlee@koreabizwire.com)
