Companies struggle to look after their aged workforce

Five years have passed since Korea extended the retirement age to 60, but companies are still struggling to manage their senior workforce.

[KOREA CHAMBER OF COMMERCE AND INDUSTRY]

Five years have passed since Korea extended the retirement age to 60, but companies are still struggling to manage their senior workforce.

Korea Chamber of Commerce and Industry (KCCI) said in a report issued Sunday that nearly 90 percent of 300 surveyed companies are having difficulties with their senior workforce. More than 70 percent also responded negatively to the recent issue of extending the retirement age further to 65 years old.

High labor costs was the most commonly cited reason companies gave for struggling with the older workers. Fourty-eight percent of the companies responded with high labor costs as the biggest difficulty.

Pressure to hire new older workers and a decrease in work efficiency were other struggles mentioned, picked by 26 percent and 24 percent of the respondents.

Having to create new tasks for the older workers and conflicts with the younger generation were also chosen by 9.7 percent and 9.3 percent of the respondents.

“Although the mandatory retirement age was extended, there were no systems implemented to split the new burden between the companies and the workers,” said an official from the KCCI. “That is why companies still feel burdened in regards to managing senior workers years after the extended retirement age was implemented and [it] became mandatory [for workers to retire at that age]."

Some companies have tried implementing various new systems to cope with the older workers.

According to the KCCI survey Sunday, 59 percent of respondents said they implemented new systems to cope with the extended retirement age. Of those respondents, 66.1 percent said they implemented a wage peak system, which gradually cuts the salary given to senior workers near retirement.

Other countermeasures taken by companies include adjusting the working hours and allowing early leaves.

But when the companies were asked to compare the work efficiency of the younger and older workers, 56.3 percent of the respondents said they were similar. About one-fourth of the respondents said younger workers performed better.

“This means that older workers are receiving more money compared to their performances and productivity,” an official at the KCCI said.

The Ministry of Employment and Labor says that the average annual salary for employees aged between 25 to 29 years old who worked for less than three years came to 32.3 million won ($27,400). Those aged between 30 to 34 years old who worked for between three to five years received 40 million won, and those aged between 55 and 59 and worked for more than 25 years received 80.1 million won.

“It is evaluated that the extended retirement age of 60 led to less employment opportunities for younger job seekers, and this is because the salary for senior workers is extremely high,” said Cho Joon-mo, an economics professor at Sungkyunkwan University.

“If the seniority system is not resolved, there will be difficulties in the future about extending the retirement age further.”

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]