Most Firms Oppose Rise in the Age for Retirement

By Lee Eun-joo, JoongAng Daily

April 14, 2010

South Korea

A majority of Korean firms oppose the extension of the retirement age in spite of fears that an outflow of senior employees could create a major social shift in the nation’s workforce.

According to a survey of 300 firms conducted last month by the Korea Chamber of Commerce and Industry, 57.4 percent said they oppose the idea.

Reasons given included an increase in labor costs (29.8 percent), a labor surplus (21 percent), labor management problems (17 percent), lower productivity (14.3 percent) and difficulties in recruiting new employees (12.3 percent). Extending the retirement age could also be controversial because too many senior workers could create a generation gap and conflicts with new recruits. 

Only 39.3 percent of the companies agreed to a retirement age extension, citing the experience and know-how of senior employees (57 percent) and improving morale (24 percent).

Asked if they planned to increase the retirement age, 92.6 percent of the firms said no, while 3.7 percent said yes and 3.7 percent said they were willing to adopt the wage-peak system, a government program for job sharing that allows firms to extend the retirement age in exchange for lower wages for seniors.

“It is crucial that we bring up the extension of the retirement age for more discussion as baby boomers [born between 1955 and 1963] have started to retire despite having the ability and will to work,” said Lee Dong-keun, vice chairman of the chamber.

Based on the survey, the average age of retirement for local firms is 56.8 years.

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