‘Retirement age of 60’ is mandatory for 5 years… ‘The labor cost burden is high and it is difficult to hire new employees’

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Although entering the fifth year of mandatory retirement age of 60, 9 out of 10 companies still have difficulties in managing middle-aged people.

As a result of a survey conducted by the Korea Chamber of Commerce and Industry on ‘the current situation of middle-aged manpower management’ of 300 domestic large and medium-sized enterprises, 89.3% answered that they are still experiencing difficulties in managing middle-aged manpower due to the mandatory retirement age of 60. . Only 10.7% answered ‘no difficulty’.

‘High labor cost’ (47.8%) was the most difficult problem for companies that answered that they had difficulties in managing middle-aged and middle-aged people. It was followed by ‘recruitment burden’ (26.1%), ‘increase in low performers’ (24.3%), ‘health and safety management’ (23.9%), and ‘lack of personnel’ (22.1%). Some companies chose ‘appropriate business development’ (9.7%) and ‘generational conflict’ (9.3%).

An official from the Korea Chamber of Commerce and Industry pointed out, “Even though a considerable period of time has passed since the retirement age of 60 was compulsory for all companies in 2017, it is still a burden on companies because the system has not been designed so that labor and management can properly share the cost of the mandatory retirement age.” did.

In relation to the mandatory retirement age of 60, 59.0% of companies took countermeasures. The most common measure was ‘the introduction of a peak wage system’ (66.1%). It was followed by ‘reduction and adjustment of working hours’ (21.4%), ‘introduction of early retirement’ (17.5%), ‘reorganization of the personnel system’ (16.3%), and ‘job training and awareness training’ (15.2%).

When asked about the level of work ability and productivity of middle-aged workers compared to younger employees, 56.3% of all surveyed companies answered ‘similar’ the most, and 25.3% answered ‘low’. Only 18.4% answered ‘high’. This means that middle-aged workers are being paid higher than their productivity.

According to the 2020 ‘wage level by age and tenure’ of the Ministry of Employment and Labor’s wage and job information system, the annual wage of 25-29-year-olds with 1st to 3rd years of service is 32.36 million won on average, and 30-34 year olds with 3rd to 5th years of service are 25 years compared to 4,066 million won. The average wage of workers aged 55 to 59 with more than one tenure is 80.1 million won.

Professor Jo Jun-mo of Sungkyunkwan University said, “After the mandatory retirement age of 60, the employment of young people is being analyzed because of the excessively high seniority that cannot be found in major countries. If the personnel system is not addressed, it will be difficult to solve the problem of youth employment decline due to the extension of the retirement age, and furthermore, even if the low birth rate and aging population worsen, it will become a stumbling block in the discussion of employment extension.”

Negative opinions were dominant about the ‘extension of the retirement age of 65’, which is demanded by some in the labor circle. 71.7% of companies responded ‘negative’ to the extension of the retirement age to 65. Specifically, 40.7% of the respondents answered that ‘it is too early to extend the retirement age in a situation where youth unemployment is serious’, 23.7% said ‘there is no way to extend the retirement age even if the employment is extended’, and ‘they are opposed to a system that benefits only from good jobs such as large corporations and public institutions’. was found to be 7.3%. 28.3%, who did not respond negatively, also said that ‘the company should decide on the method of employment extension, such as extension of the retirement age,’.

Companies predicted that the introduction of an extension of the retirement age to 65 would have a negative impact on jobs. Regarding the effect of the extension of the retirement age on jobs, 32.3% of companies answered that ‘will adversely affect the retention of existing manpower’, ‘the scale of new hires itself will decrease’ (17.0%), and ‘stumbling blocks in increasing the size of new hires’ ‘ (12.7%) answered that it will be.

Meanwhile, it was found that 43.7% of current companies are still hiring after the age of 60. As for the continuous employment method, 95.4% of the respondents answered ‘re-employment as a contract worker, etc.’, while ‘recruitment/transfer of affiliates/partners’ and ‘extension of the retirement age’ were only 8.4% and 5.3%, respectively.

Yoo Il-ho, head of the employment and labor policy team at the Korea Chamber of Commerce and Industry, said, “If the effect of the mandatory retirement age of 60 is not resolved and the employment extension is pursued based only on the rate of aging, the employment difficulties of the MZ generation can be further aggravated. Efforts to advance the job market by increasing wage and job flexibility such as promotion of job change and job change should be prioritized,” he emphasized.

By Kwon Geon-ho, staff reporter [email protected]

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