Three out of Ten Manufacturing Companies in Gyeonggi-do Address Labor Shortages by Rehiring Retirees

Three out of ten manufacturing companies in Gyeonggi-do are addressing labor shortages by rehiring retirees.

The Gyeonggi-do Job Foundation announced on June 10 its report titled "Status of Continued Employment in Gyeonggi-do Businesses," which analyzes the implementation of mandatory retirement systems, the use of reemployment programs after retirement, and corporate perceptions of continued employment among businesses with five or more employees in the province.

The "mandatory retirement system" refers to a policy where employees retire upon reaching a certain age, while the "reemployment system" is an employment method that allows workers who have retired due to mandatory retirement or other reasons to be rehired under a new contract.

According to the survey, 32.2% of businesses with five or more employees in the province operate a mandatory retirement system. In particular, 80.7% of small businesses with five to nine employees do not implement a mandatory retirement system. Among businesses with a mandatory retirement policy, 60.5% reported having no plans to extend the retirement age, citing concerns about increased labor costs and decreased productivity among older workers.

On the other hand, the "reemployment system," which allows workers to be rehired after retirement, is actively implemented among small and medium-sized enterprises, especially in the manufacturing sector. Among all surveyed businesses, 19.4% had a reemployment system in place, with the rate reaching 30.1% among manufacturing companies. Many manufacturing businesses with 10 to fewer than 100 employees were rehiring more than 60% of their retirees, and a significant number of these companies allowed continued employment without restrictions on the duration of service.

Gyeonggi-do Job Foundation Building Exterior

The most common reason for rehiring retirees was "because they are highly skilled and familiar with the work," indicating that reemployment is not merely a stopgap for labor shortages but a strategy for maintaining productivity. In the manufacturing sector, 86.3% of newly hired workers were in their 40s, highlighting this as a key factor in sustaining productivity. This finding contrasts with concerns that extending the retirement age would reduce youth employment.

However, only a small number of companies that have adopted reemployment systems have established separate regulations or guidelines for their operation. The report emphasized the need to develop reemployment operation guidelines to support efficient workforce management for companies and stable employment for workers.

Accordingly, the report suggested that, as the utilization of middle-aged and older workers becomes increasingly important, employment strategies tailored to the industrial structure of Gyeonggi-do should be developed.

Kim Yoonjung, a research fellow at the Gyeonggi-do Job Foundation, stated, "For a sustainable labor market, it is necessary to respect the experience and capabilities of middle-aged and older workers while also adopting a balanced approach that reduces the burden on companies. Rather than engaging in fruitless debates that are out of touch with the realities of the industrial field, a flexible, reemployment-centered model could be a more effective short-term alternative."