The Korea Enterprises Federation (KEF) has publicly criticized the federal government’s proposed extension of the authorized retirement age to 65, stating that “solely common employees at giant firms with unions will profit.” The federation proposed post-retirement re-employment and wage system reforms as alternate options to retirement age extension.
On Nov. 11, the Korea Employers Federation launched its “Enterprise Neighborhood’s Place on Authorized Retirement Age Extension,” stating that “the 65-year authorized retirement age extension presently proposed by the 2 main labor federations is a coverage solely for his or her union members” and “the advantages might be monopolized by common union employees at giant firms and public establishments, who comprise solely 20% of employees, whereas the remaining 80% of employees will inevitably be uncared for.”
Lee Dong-geun, KEF government vice chairman, defined, “Just one-fifth of all workplaces presently function a retirement system,” including “Even these are largely giant firms and public sector workplaces with unions, and don’t symbolize the positions of small enterprise and non-regular employees in any respect.” In truth, the Financial institution of Korea not too long ago launched an evaluation displaying that retirement age extension has restricted results in locations with low unionization charges, reminiscent of small companies and non-regular employees.
The KEF identified that as extra aged employees profit from authorized retirement age extension, youth unemployment might worsen. Based on the Financial institution of Korea, after the necessary retirement age of 60 was applied, for each extra aged employee (ages 55-59), the variety of younger employees (ages 23-27) decreased by 0.4 to 1.5 individuals. The federation expressed concern, stating “(Not solely the Financial institution of Korea however) quite a few research have confirmed that retirement age extension has a adverse influence on youth employment” and “firms with increased wage seniority and bigger scale expertise higher youth employment discount.”
The company burden from authorized retirement age extension can also be vital. At the moment, wages for employees with over 30 years of service in Korea are thrice these of employees with lower than one yr of service. That is the very best degree amongst main international international locations, and the price of retirement age extension quantities to a complete of 30 trillion 200 billion gained. That is equal to the extent that might make use of 902,000 younger individuals.
The KEF proposed a “Particular Act on Submit-Retirement Re-employment (tentative title)” as a substitute for retirement age extension. As an alternative of blanket retirement age extension, it argued for guaranteeing firms’ re-employment decisions. Lee defined, “Some industries together with Samsung Electronics, POSCO, and Hyundai Motor Co. are already introducing post-retirement re-employment” and “like Japan, we should always allow work at roughly 70% of month-to-month wage based mostly on retirement age.”
The KEF said that discussions on wage system reform must also be carried out in parallel. The federation stated, “Given the big employment burden on employers stemming from seniority-based wage techniques, efficient measures to reform seniority-based wage techniques into wage techniques based mostly on job worth and particular person efficiency should be ready earlier than discussing aged employment strategies.”
