80% of Companies with Post-Retirement Reemployment Practice Selective Hiring... "Urgent Need for Job and Performance-Based Wage Reform"

KEF Survey of 500 Companies
Retirement Age Extension Likely to Lead to "Wage System Restructuring and Reduced New Hiring"

Eight out of ten companies that have introduced a post-retirement reemployment system are found to practice selective reemployment. The larger the company, the higher the proportion of selective reemployment, while smaller companies are more likely to reemploy all applicants.

According to the survey, 59% of companies stated that wages upon reemployment remain at a similar level to pre-retirement, while 34% reported a decrease in wages.

Yonhap News

The Korea Employers Federation conducted a survey titled "Status and Policy Demand for Post-Retirement Reemployment System Operations" on 500 companies nationwide with 30 or more employees that operate a post-retirement reemployment system. The results showed that 80.4% of responding companies have adopted a "selective reemployment" approach.

The most common criterion for selecting reemployment candidates was "work performance and job accomplishment," cited by 59.5% of respondents. This was followed by "scarcity of skills and know-how and the need for their transfer" (44.8%) and "the ability to perform the job, including physical and mental health" (43.8%).

However, the use of performance-based criteria was relatively lower in companies with larger scale and in those with labor unions. This is presumed to be due, in part, to the potential for labor-management conflicts and concerns over legal disputes related to performance evaluations.

The average wage reduction rate among companies reporting a decrease in wages upon reemployment was 20.6%. Companies with a larger workforce and those with labor unions experienced a greater reduction in wages.

This can be interpreted as follows: at large companies or unionized workplaces, the seniority-based wage system results in higher wage levels at retirement. When working conditions are adjusted during the reemployment process to reflect job responsibilities and productivity, the scale of wage adjustment is greater compared to small and medium-sized companies.

The factor most cited as a burden in operating the reemployment system was "legal risks involved in adjusting employment conditions such as wages," with 47.1% of companies highlighting this. Concerns about "disputes during the process of contract termination and renewal" were also high, at 39.2%. Among large companies with 1,000 or more employees, more than half (59.4%) pointed to this as the biggest burden.

Large companies, which tend to have more complex HR systems and lower labor flexibility, are more concerned about the legal risks associated with selective reemployment.

Furthermore, if the statutory retirement age is uniformly extended to 65 in the future, 52.4% of companies responded that additional measures such as "restructuring the wage system" or "reducing new hires" would be unavoidable. The most common response was "promoting wage system restructuring" at 34.4%, followed by "reducing new hires" and "reducing or abolishing the reemployment system," each at 25.2%.

Lee Sangcheol, Head of Employment and Social Policy at the Korea Employers Federation, said, "More companies are adopting and operating the reemployment system to utilize the skills and experience of older workers, but its spread remains limited due to legal dispute risks and lack of incentives." He emphasized, "It is urgent to eliminate legal uncertainties in the reemployment process and establish an institutional foundation to support a shift toward a job and performance-based wage system." He added, "Effective legislative measures are needed, such as introducing special procedures for amending work rules and enacting a special law for reemployment."

This content was produced with the assistance of AI translation services.