A survey found that 86% of small and medium-sized enterprises with a mandatory retirement system prefer "selective reemployment" as a way to extend employment for retirees. Selective reemployment is a method in which the targets for extended employment are determined based on factors such as job, performance, and health status, followed by the signing of a new labor contract to adjust the employment period and wages.
The Korea Federation of Small and Medium Enterprises announced on the 19th the results of a survey of small and medium-sized enterprises with 30 or more employees on employment extension.
According to the survey, only 13.8% of corporations said the statutory retirement age should be extended across the board. The biggest burden factor when extending the retirement age was increased labor costs (41.4%), followed by industrial safety and health issues (26.6%), fewer opportunities for youth and new hires (15.8%), and lower productivity and work efficiency (12.2%).
Labor cost burden was the highest across all industries, and the second most burdensome factor when extending the retirement age varied by industry. In manufacturing and general services, industrial safety and health issues were the highest at 34.4% and 27.1%, respectively, while knowledge-based services cited fewer opportunities to hire young people (22.9%).
Among responding corporations, 67.8% said they already operate a system to rehire retirees as contract or similar positions. Those not operating a reemployment system accounted for 18.4%, and corporations without retirees to whom it would apply were 13.8%.
Among corporations implementing reemployment, 79.1% said they decide on employment extensions based on job, performance, and health status. Corporations that offer extensions to all who want them were 20.9%. In terms of wage levels, 75.7% maintained a level similar to the point of retirement, 23.3% reduced wages, and 1.0% increased them.
Responses on the need for employment extension by job category also differed by field. In manufacturing, 92.7% said production workers needed employment extensions, while other jobs such as general office work were around 6%. In knowledge-based services, research and development positions were 47.6% and general office positions were 32.4%; in general services, general office positions were 45.8% and research and development positions were 25.0%.
Policies deemed necessary to promote employment of older workers included employment subsidies (88.5%) and tax support (85.2%). There were also responses calling for support for social insurance premiums (73.7%), safety and health (66.8%), vocational training (46.7%), and brokerage and placement services (28.0%).
Lee Myeong-ro, head of the human resources policy division at KBIZ, said, "To ease the manpower shortage at small and medium-sized enterprises and reduce concerns about decreased youth employment, measures are needed to increase wage and employment flexibility," and added, "As labor costs are the biggest burden, fiscal support such as employment subsidies and tax support should be expanded to reduce the burden on small and medium-sized enterprises."