The Era of 7 Million Working Seniors. (Image courtesy of Yonhap)
SEOUL, Sept. 1 (Korea Bizwire) — A majority of South Korean companies prefer to rehire older employees after retirement rather than extend their contracts or adopt alternative employment models, according to a new survey that underscores both the demand for experienced workers and the challenges of managing labor costs.
The Korea Employers Federation (KEF) said Sunday that in a survey of 1,136 firms with at least 30 employees, 61 percent said they favored “rehiring” workers aged 60 and older. Under this arrangement, companies end the original employment contract at the statutory retirement age and sign a new one, often with adjusted terms.
Half of the companies surveyed said an appropriate wage for rehired workers would be between 70 and 80 percent of their final salary before retirement. Nearly 85 percent said reemployment should be selective, based on performance and other criteria, while only 15 percent supported rehiring all employees who wished to stay on.
Older Workers Outnumber Younger Employees at Top Korean Firms for First Time (Image supported by ChatGPT)
The results reflect mounting pressure on South Korea’s aging workforce. While the country faces a shrinking labor pool, companies remain wary of high wage structures and rigid labor rules. KEF said the financial burden of senior employees, combined with difficulties in terminating staff once rehired, continues to limit corporate flexibility.
The survey also highlighted a lack of structural adaptation in personnel and wage systems. More than 61 percent of companies said they had not revised their pay structures since the retirement age was legally set at 60, and 57 percent had not introduced a wage-peak system, which gradually reduces salaries in exchange for extended employment.
Among firms that do rehire, the most common contract term was 12 months, cited by 85.7 percent of respondents.
Asked what policy measures would help them employ more older workers, nearly half pointed to tax incentives for senior hires and subsidies to offset wage costs.
“Excessive wage seniority and rigid labor protections make it difficult for companies to effectively utilize older workers,” said Lim Young-tae, head of KEF’s employment and social policy division. “What is needed are realistic measures that ease the cost burden and give firms more flexibility in selecting the people they need.”
The findings come as South Korea grapples with one of the world’s fastest-aging populations, raising urgent questions about how to balance job security, labor productivity and corporate competitiveness.
Ashley Song (ashley@koreabizwire.com)
