Six out of 10 companies in South Korea prefer to rehire rather than extend retirement age

A survey has found that South Korean companies most prefer the "re-employment" method when utilizing middle-aged and older workers after the retirement age of 60.
On the 31st, the Korea Employers Federation announced that it had targeted 1,136 companies nationwide with more than 30 employees that have a mandatory retirement age.
In a survey conducted in 2017 on corporate awareness and actual conditions regarding continued employment of the elderly, it was revealed that 61% of respondents chose "re-employment" as the employment method after retirement. This was followed by "extension of the retirement age" at 32.7%.
The next most common responses were "abolishing the retirement age" at 6.3% and "eliminating the retirement age" at 6.3%. Re-employment refers to the process of rehiring workers who have reached retirement age by concluding a new contract that includes wage adjustments after terminating their existing employment relationship.
Regarding the appropriate wage level for re-employed elderly workers, half of the responding companies (50.8%) answered that "70-80% of the wage before retirement" is appropriate.
The most common answer was "70%" at 27.8%, followed by "70%" at 23.0%. Only 15.1% of respondents said that all middle-aged and elderly workers should be rehired, and 84% said that they should be rehired.
0.9% answered that selection should be based on an evaluation of performance and the presence or absence of grounds for disqualification. The most common answer, at 78.2%, was that a 12-month contract period is appropriate for re-employment.
When asked what policy support is needed to revitalize the utilization of middle-aged and elderly people aged 60 and over, the most popular answers were "tax benefits" (47.7%) and "labor cost support" (46.3%).
61.4% of companies have not revamped their wage structures since the legalization of the 60 retirement age, and 56.8% of responding companies also said they have not introduced a wage peak system.
Meanwhile, 64.1% of responding companies said they had experience continuing to employ middle-aged and older workers beyond the legal retirement age, and 80.9% of these companies said they had used the "re-employment" method.
In particular, for companies with more than 1,000 employees, the percentage of respondents who chose "re-employment" reached 90.0%, indicating that the larger the company, the more likely it is that they prefer re-employment.
Lim Yong-tae, head of the employment and social policy department at the Korea Employers Federation, said, "The high labor costs of middle-aged and elderly workers and the rigidity of employment are the main factors that make it difficult for companies to utilize them."
He emphasized, "So that companies can more easily utilize middle-aged and older workers to meet their labor needs, measures to ease the burden of labor costs and guarantee selective employment must be prepared through social discussion."