Discussions around extending the retirement age are gaining momentum in political and corporate circles. (Image courtesy of Yonhap)
SEOUL, Dec. 3 (Korea Bizwire) – As South Korea confronts an aging population, discussions around extending the retirement age are gaining momentum in political and corporate circles. While companies remain wary of increased wage burdens, they are exploring flexible approaches to address the issue.
The ruling People Power Party has highlighted the urgency of reform. Party leader Han Dong-hoon recently cited rising health expectancy, now exceeding 70 years, as a reason to allow older workers to remain in the labor force. However, extending retirement remains contentious for businesses due to South Korea’s seniority-based wage system, where longer tenure translates to higher pay.
A recent survey by the Korea Economic Research Institute found that 67.8% of large companies view retirement extensions as a financial strain. The analysis also estimated that raising the retirement age to 65 could cost businesses up to 30.2 trillion won in additional annual labor expenses.
Despite these challenges, some companies are taking proactive steps. Firms such as Dongkuk Steel, Crown Confectionery, and Incheon International Airport Corporation have already extended retirement ages to 62 or higher.
Others, like Hyundai Motor and Kia, offer post-retirement reemployment programs, allowing skilled retirees to return on revised pay scales. These programs, seen as cost-efficient solutions, have gained traction, with Hyundai expanding its reemployment period from one to two years.
Innovative alternatives are also emerging. KT raised the starting age for its wage-peak system from 57 to 58, while SK Hynix introduced a “Master” role to retain technical expertise post-retirement.
Similarly, Samsung Electronics operates a “Senior Track” system, enabling veteran employees to continue contributing, and LG Electronics offers advisory roles for specialized fields.
Experts argue that piecemeal approaches to retirement extension may not suffice. Instead, they advocate overhauling South Korea’s rigid labor market, including reforms to the wage system.
“Merely increasing the retirement age could burden companies and limit opportunities for younger workers,” said Lim Young-tae, head of the Korea Employers Federation’s Employment and Social Policy Division. “Reforming wage structures to align pay with productivity is essential for sustainable use of older talent.”
The debate underscores the balancing act required to adapt to demographic shifts while maintaining economic and labor market stability.
M. H. Lee (mhlee@koreabizwire.com)
