Korea GM Also Introduces Skilled Worker Reemployment System... First Step Toward Practical Retirement Age Extension

Labor and Management Reach Tentative Agreement on Early Morning of 23rd
Basic Pay Increase of 101,000 Won and Performance Bonus of 15 Million Won

The labor and management of Korea GM have agreed to find a way for workers who have reached retirement age to work for an additional one or two years after retirement. They plan to explore a contract worker system similar to the "Senior" or "Veteran" positions used at Hyundai Motor and Kia, the largest domestic automakers, which allow retirees to work up to two more years. This is seen as a practical alternative given the difficulty of immediately extending the retirement age.

According to the tentative wage collective bargaining agreement reached by Korea GM labor and management on the 23rd, both parties agreed to review and discuss employment measures including this matter after concluding this year's negotiations. They agreed to "aim to conduct phased pilot operations for skilled jobs requiring specialized technology starting from the end of 2025."

Trax Crossover produced at Korea GM Changwon Plant
Photo by Korea GM

The company's retirement age is 60. Currently, there is no separate reemployment system in place. Hyundai Motor introduced a contract worker system in 2019, allowing employees in research or technical positions who meet certain conditions after retirement to work for an additional year. Hyundai Motor labor and management agreed in this year's wage negotiations to extend this period by one more year. Earlier, Kia labor and management agreed last year on a plan allowing retirees to work up to two years (1+1 years) after retirement. Hyundai Motor management also proposed adding one more year to the period to the union last year, but it was not included in the final agreement.

As the population ages and pension receipt ages are delayed, the perception that the retirement age should be extended has spread throughout society. However, from the employer's perspective, the domestic wage system strongly emphasizes seniority, which increases wages the longer one works, leading to cost burdens, making them negative about extending retirement age. There are also concerns that it could worsen youth unemployment. It is expected to take considerable time to institutionalize and mandate retirement age extension. As a result, contract worker systems like these have been introduced one by one in some workplaces as a practical alternative.

Korea GM labor and management failed to narrow their differences over wage increase rates, leading to strikes, but have now entered a recovery phase by presenting a tentative agreement. The union plans to hold a member vote over two days starting on the 25th. They tentatively agreed on a basic wage increase of 101,000 won and a performance bonus of 15 million won, including last year's business performance and incentive payments.

Along with this, they agreed to release new models of the Sports Utility Vehicles (SUVs) Trax and Trailblazer, currently produced at the Bupyeong and Changwon plants, by 2027. They will also consider introducing other GM brands operated by the company besides Chevrolet, Cadillac, and GMC, which have already been launched domestically, as well as launching export models in the domestic market. Although export volumes to the U.S. have significantly increased compared to the past, this is intended to address sluggish domestic market performance.