6 out of 10 Domestic Companies Say Extending Retirement Age Beyond 60 Is a Burden at Present

The Biggest Burden Factor is 'Labor Cost Burden Due to Seniority-Based Pay System'

[Asia Economy Reporter Yu Je-hoon] Six out of ten domestic companies feel burdened by extending the retirement age beyond 60 at the current time.

The Korea Employers Federation announced on the 19th that it conducted a 'Corporate Awareness Survey on Elderly Employment Policies' targeting 1,021 companies with five or more employees in Korea, and the results showed this trend.

According to the survey, 58.2% of companies responded that "extending the retirement age beyond 60 at the current time is burdensome" (11.0% very burdensome, 47.2% burdensome). In particular, among companies with more than 1,000 employees, 71.2% expressed that extending the retirement age beyond 60 is burdensome, the highest rate. The larger the company size, the higher the proportion of responses indicating that extending the retirement age is burdensome.

Companies that responded that extending the retirement age beyond 60 is burdensome cited the biggest burden as "labor cost burden due to the seniority-based wage system (50.3%)." Other reasons included decreased productivity of elderly workers in their current roles (21.2%), personnel stagnation within the organization (14.6%), lack of suitable jobs (9.3%), and work environments unsuitable for elderly workers (3.9%).

Regarding measures to reduce these burdens, the most common response was "introduction and expansion of the wage peak system" at 34.5%, followed by wage system reform (20.8%), reassignment or transfer of elderly workers (14.3%), and implementation of training to improve elderly workers' job skills (14.2%).

More than half (53.1%) of the companies that felt burdened by extending the retirement age beyond 60 responded that it would have a negative impact on new hiring. Meanwhile, 39.9% said it would have little impact, and only 6.9% said it would have a positive impact on new hiring.

The proportion of respondents who believed there would be a negative impact on new hiring was higher in companies with labor unions and larger companies. In fact, among companies with labor unions, 64.2% responded that there would be a negative impact on new hiring, whereas only 46.6% of non-union companies responded similarly.

Awareness of the government's elderly employment support system among companies was low, and to improve this, the most common response (30.1%) was that "promotion and system guidance need to be strengthened." Additionally, companies most frequently cited "wage support (28.1%)" and "legal and institutional improvements to secure diversity in elderly workers' labor contracts (25.9%)" as support measures to expand the utilization of elderly workers.

Meanwhile, the current operation of the retirement system showed clear differences by company size. Among companies with fewer than 30 employees, "no retirement system" was the most common response at 66.9%, while among companies with more than 1,000 employees, "60 years retirement (statutory retirement age)" was the most common at 70.2%. Responding companies evaluated elderly workers as having high "diligence (60.1%)" and "organizational loyalty (32.1%)," but lacking in "digital adaptability (51.0%)" and "creativity (30.6%)."

Lee Hyung-jun, head of the Employment and Social Policy Division at the Korea Employers Federation, said, "About six out of ten responding companies feel burdened by extending the retirement age beyond 60 at the current time, and more than half of these companies expect it to negatively affect new hiring. Now, rather than policies that increase the burden on companies, including extending the retirement age beyond 60, it is a priority to consider effective support measures."

In particular, Lee emphasized, "Since 50.3% of companies that feel burdened by extending the retirement age cited labor cost burdens due to the seniority-based wage system as the biggest burden, it is urgent to improve related labor laws comprehensively to secure wage and employment flexibility, such as supporting the reform of the seniority-based wage system into a job- and performance-based wage system. Vocational training to supplement the elderly workers' lack of digital adaptability is also important."

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