[Retirement Age Extension, Time to Decide] 'Labor Cost Burden' Remains... Wage and Job Structures Must Be Addressed Together

Although discussions on extending the retirement age to 65 are gaining momentum, many point out that there are significant structural challenges that companies must overcome to implement the system. Simply increasing the retirement age could significantly disrupt organizational labor cost structures and may also hinder youth recruitment and rank rotation. In particular, this survey showed a strong perception that it would be difficult to introduce retirement age extension unless there is a 'set reform' that simultaneously changes the retirement age, wage, and job structures.

The area of greatest concern for companies regarding the impact of extending the retirement age was the burden of labor costs. Among the responding companies, 43.3% cited 'increased labor costs due to seniority-based wage systems' as the main burden of extending the retirement age. This was followed by 'reduced capacity for new youth recruitment' (22.7%) and 'personnel stagnation and rank bottlenecks' (16.5%).

This result reflects the practical burden that, if the retirement age is extended, the longer years of service and the automatic wage increases could lead to high wages for older employees being paid for an extended period. In particular, companies are highly wary of the labor cost burden because it can lead not only to increased costs but also to rigidity throughout the personnel structure.

When asked about the tasks that need to be proactively addressed in response to retirement age extension, 'adjustment and redesign of the wage system' (34.7%) received the most responses. This was followed by 'review of workforce structure' (24.7%) and 'preparation of measures to balance youth recruitment' (13.9%). This confirms the perception that the entire internal HR system would need to be overhauled to introduce the system.

Demands for structural reform were also repeated in questions about 'institutional improvements needed for retirement age extension.' Policies to 'induce conversion of wage systems' (16.8%) and 'redesign of job roles for older employees' (18.8%) ranked high. 'Preparation of measures to link with expanding youth employment' (12.9%) was also presented as a major supplementary demand.

As the retirement age increases, the issue of 'personnel stagnation' was also raised, with concerns that older employees would occupy higher positions for longer periods, blocking the flow of personnel within the organization and reducing hiring and promotion opportunities for younger employees.

These concerns were repeatedly raised in open-ended responses as well. Some companies responded, "There is a need for flexibility in the system, such as adjusting salaries for older employees who continue working," and "Consideration is needed for the increased labor cost burden on companies due to retirement age extension and the relative decrease in good jobs for young people."

Responding companies believe that, since retirement age extension is a structural issue that simultaneously affects labor costs, rank rotation, and new recruitment, a parallel structural design should accompany the system rather than implementing it in isolation. Ultimately, what companies emphasize is not simply raising the age limit, but an organic overhaul of the entire HR system. If the government wants to push forward with retirement age extension, it must sufficiently reflect these corporate realities and concerns in system design to ensure the effectiveness of the policy.