[Retirement Age Extension, Time to Choose] Even Auto Industry Opposed to Extension Is Rehiring Retirees

Hyundai Motor and Kia's "Skilled Re-employment" System
Implemented for Retirees Since 2019
GM Korea to Begin Discussions Soon
Centered on Manufacturing Where Skilled Expertise Matters
Utilization of Retirees' Professional Skills Becoming Established
Potential Increase in Non-Regular Workers
Challenges Remain for Youth Employment

Even before the term "extension of retirement age" became a major topic in Korean society, a significant number of companies had already been continuously employing retirees. Some manufacturing companies are now considering re-employment as well. In a recent survey conducted by Asia Economy of the top 500 companies, 62% of automobile companies and more than 57% of companies in the petrochemical sector responded negatively to the idea of continued employment, saying it was "not necessary." However, it is assessed that companies have no choice but to acknowledge, at least to some extent, the need for skilled workers.

Cases of re-employment were particularly notable in the automobile industry, which showed the strongest opposition to extending the retirement age in the survey. According to industry sources on May 13, GM Korea is expected to soon begin discussions on a re-employment plan. Last year, GM Korea's labor and management agreed during wage negotiations that "discussions can be held with the goal of implementing a phased pilot program for skilled positions requiring specialized expertise starting from the end of 2025." A company representative stated, "This year's wage negotiation agenda has not yet been set," and added, "Once the union presents specific demands, we will enter negotiations."

Since 2019, Hyundai Motor and Kia have implemented a "skilled re-employment" system for technical and maintenance retirees. For employers, this enables them to secure skilled labor at a relatively low cost, while on-site employees are able to work for an additional two years after retirement.

KG Mobility also introduced a system at the end of last year that allows retirees to work for one more year as regular employees, provided they apply. In particular, to enhance job security, the company upgraded the employment status from contract to regular employee. Defense industry company LIG Nex1 has been re-employing competent retirees on a yearly basis through a contract re-employment system introduced in 2008.

The main reason why the re-employment system is taking root, especially in manufacturing industries where skilled techniques are directly linked to product quality, is that it enables companies to make broad use of retirees' expertise. Even as technology trends change rapidly, the role of skilled technicians remains crucial to maintaining high-quality standards. In this context, a 2023 survey by the Korea Employers Federation (KEF) of over 1,000 domestic companies found that as many as 74.5% had experience in continuously employing workers who had reached retirement age.

For this reason, even though some industries express opposition to continued employment, there is a growing argument that companies need to more specifically identify which tasks require skilled workers.

However, there are still challenges to address, such as the possibility that the re-employment system could lead to an increase in non-regular workers with relatively low job security, and that it could negatively affect youth employment. In some companies, even when retirees are successfully re-employed as contract workers, conflicts arise with MZ generation (Millennials + Generation Z) employees, who feel that retirees are "unwilling to give up their vested interests." Last year, Hyundai Motor's labor union attempted to change its regulations to allow re-employed skilled workers to join the union, but it is reported that the majority of union members voted against the proposal.

Younger employees, in particular, acknowledge the skills of re-employed retirees but also complain that their own opportunities to develop technical expertise are being taken away. For this reason, there are calls for fair distribution of work to minimize conflict between re-employed and existing staff.

An industry official commented, "Labor and management need to work together to find ways to expand work opportunities while maintaining appropriate levels of compensation."