[Retirement Age Extension, Time to Choose] Asking About 'Retirement Age Extension' at Korea's Turning Point

Major Changes Expected in Labor Structure and National Economy
Due to Departure of the Second Baby Boomer Generation
Presidential Candidates Announce Policy Pledges
A Critical Issue That Must Be Addressed
for Economic and Social Advancement
Survey of Korean Companies

The issue of continued employment for seniors aged 60 and above is expected to become a key challenge for the next administration. Following the announcement of policy pledges by major presidential candidates, the Economic, Social and Labor Council has also proposed concrete measures to ensure continued employment. Both business and labor sectors are now involved in the discussion.

The heightened attention to extending the retirement age and rehiring seniors is closely related to structural changes in Korean society. The departure of the second baby boomer generation (those born between 1964 and 1974), which began last year, is expected to bring significant changes not only to the labor structure but also to the national economy. According to Statistics Korea and other sources, nearly 10 million people will leave their jobs due to retirement over the next ten years. Meanwhile, due to low birth rates, the influx of new labor is decreasing. This inevitably impacts productivity. The Korean economy is already criticized for a lack of innovation. If even the labor force that has been supporting productivity continues to shrink, economic vitality will decline. Individual lives, including income and pensions, will also be affected.

The importance of this issue is also highlighted in a survey of Korea's top 500 companies. According to the results of the "Survey on Corporate Status and Institutional Demand Related to Retirement Age Extension (to 65)" released by Asia Economy on May 12, six out of ten major domestic companies agreed that seniors should continue to be employed after retirement. More than half of respondents agreed with the necessity, regardless of the specific method. The survey was conducted by Mono Research, a professional market research agency, from April 24 to 29, targeting 101 companies among the top 500 domestic firms by revenue.

Survey of Korean Companies

60%: "Continued Employment for Seniors Is Necessary"

43%: "The Biggest Obstacle Is Labor Costs"

59%: "Implementation Should Be at Companies' Discretion"

Among responding companies, 60.4% answered that continued employment of seniors is "necessary." In contrast, 39.6% said it is "not necessary." The most common reason cited for the need to continue employment was "retaining the skills of senior workers" (41.0%).

However, perspectives on extending the retirement age varied significantly depending on the workforce structure and nature of work in each industry. Among semiconductor companies, 75.0% responded that extending the retirement age is "not necessary." The figure was 62.5% in the automotive sector and 60.0% in steel and shipbuilding. In fields where experience and stability are crucial, there was stronger support for extending the retirement age. In finance, 84.2% supported extension; in leasing, wholesale, and logistics, 80.0%; in information and communications, 66.7%; and in construction, 63.6% responded that extension is "necessary."

The biggest obstacle to extending the retirement age was identified as "increased labor costs due to the seniority-based wage system" (43.3%). Currently, 58.4% of companies process retirements without separate contracts when employees reach the retirement age. Companies that rehire employees as contract (or temporary) workers after the age of 60 account for 35.6%. Only 3.0% of companies operate a retirement system that extends beyond age 60.

While companies acknowledge the institutional necessity, they made it clear that implementation should not be mandated by the government but left to their discretion. According to a survey by the Korea Economic Research Institute, companies estimate that extending the retirement age would incur an additional annual cost of 30.2 trillion won. Companies responded that "the government should be responsible for designing the system, but whether to implement it should be left to each company's discretion" (59.4%). They also said that "the burden should be minimized by gradually expanding the system after a pilot operation" (48.5%). The most requested government support measure was "granting companies the right to choose autonomously" at 23.7%. "Support for wage system reform" and "support for cost reduction such as tax benefits" followed at 21.8% each.

Experts agree that this is a challenge Korea must address to move to the next level. In particular, they point out that the core of the continued employment debate is balancing corporate sustainability with the employment of senior workers. Kim Heeseong, professor at Kangwon National University Law School and president of the Korean Society of Social Law, stated, "With the trend of low birth rates and an aging population intensifying, the decline in the working-age population has emerged as a major social issue." He added, "It is time for a convincing discussion on whether it is appropriate to legally mandate the extension of senior employment or to leave it to labor-management negotiations at each company."