More companies move to raise retirement age
“As the retirement age has become a social issue since the end of last year, we talked about whether we should move one step further at meetings for this year’s business plan,” said a company official. “A retirement age of 75 is under consideration.”
The company extended its retirement age from 55 to 65 in 2005 by introducing “job sharing,” which allowed employees 50 years or older to work four days a week and receive 80 percent of their salary. From the age of 55, employees can work three days a week and take 60 percent of the salary.
Twelve employees are in the job sharing program, including 56-year-old Chairman Park Sang-hwan,
“It’s too early to evaluate the system since there are so few subject to the program among the 1,900 employees, but it’s clear that our human resource management is more efficient,” said Yang Kyeong-seo, human resources team manager at Hanatour.
Although the average retirement age of local companies is 55, Korean workers consider it to be 48.8, according to a survey by an employment portal Job Korea. The actual retirement age at small and medium enterprises (SME) was 48.2 years old.
Meanwhile, more companies are increasingly keen to extend the retirement age. The trend started by Hyundai Heavy Industries and Homeplus last year is spreading to small- and mid-sized businesses.
Kisantech, a distributor of ophthalmic medical devices extended its retirement age from 55 to 60 starting this month, which will affect five employees next year.
“Since most of my friends from college started early retirement 10 years ago, I feel like my pockets have already become fatter after hearing that I am guaranteed to be able to work for an additional seven years,” said Choi Dong-won, the 53-year-old managing director at the company.
“Although it is a small company with 50 employees, I decided that it is time to keep the know-how of senior employees,” said 60-year-old Kang Tae-sun, president of Kisantech.
Rather than introduce a reduced salary work sharing program, the company plans to maintain employees’ full salary after the age of 55.
While Kisantech is on solid financial footing at present, the company said its plans may change in response to any future fluctuations in earnings and productivity.
Kang said the extension of the retirement age is a way to attract young talent who will work for the company for a long time.
“When we educate new employees with all our efforts, they often move on to large corporations. A few years ago, six in 10 new employees left at some point,” said Kang.
He complained that even though the company pays an annual salary of 32 million won ($29,472) to new graduates and provides benefits such as language courses and accident insurance, it is extremely difficult to find loyal employees for SMEs that have low name recognition.
When it comes to the industry of casting, forge welding and tooling, having a mandatory retirement age often is not necessary because of the difficulty in finding skilled workers.
“There has been no mandatory retirement in this industry for several years,” said Kang Dong-han, president of Korea Forging Cooperative (KFC).
Kang’s Hanho Industrial Corporation had 72 billion won in sales and more than 2 billion won in operating profits last year. Sixteen of its 134 employees are over age 55.
“For on-site personnel, age does not matter as long as they can do the job. A 67-year-old field worker receives an annual salary of about 43 million won,” said Kang.
The situation is similar at Daekwang Casting, a foundry in Gyeongseo-dong, Seo-gu, Incheon.
“The retirement age of clerical and management positions is 60, but there is no retirement age for production positions,” said Ryu Ok-seop, the CEO.
Although the annual wage increases for people over the standard retirement age is lower, the company is still raising their pay every year.
“If the extension of the retirement age is legislated, companies will avoid the regulation with other tricks such as early retirement policies,” said Ryu Jae-woo, economics professor at Kookmin University. “It is more effective to give incentives. For example, it is better to induce companies to extend the retirement age by providing financial assistance or tax incentives to companies that have many employees over 60 years old.”
By Lee Sang-jae [firstname.lastname@example.org]