[Photo by MK DB]
A number of labor unions in South Korea, including those of top Samsung Group and Hyundai Motor Group, are expected to ask their management to extend the retirement age by up to five years from 60 in line with the government’s policy move to tackle shortages in the workforce.
According to multiple sources from the conglomerate circle on Monday, labor unions of major businesses in Korea, including POSCO, Hanwha, and HD Hyundai, have decided to request their management to extend the retirement age.
Workers at Kia Corp. have decided to confirm a wage proposal for this year in a meeting next week, which includes putting off the retirement age to 62 from the current 60. The proposal is to extend the retiring age for two years until workers begin to receive national pension.
The labor union of its affliate Hyundai Motor Co. has also included in its proposal a plan to extend the retirement age to 64 from 60.
Labor union of Samsung Group is also expected to demand the company to extend the retirement age to 65 as part of the 10 requests that include the abolishment of the salary peak system.
The labor unions’ move comes six years after the government raised Korea’s retirement age to 60 in 2017.
The labor unions had pushed back the agenda of extending the retiring age in their wage proposals as uncertainty loomed in the industry circle due to the Covid-19 setback. It is, however, now a hot issue in the industry with the pandemic ending.
The government also announced a basic plan to boost employment of senior workers earlier this year. It set the policy of inducing the companies to voluntarily continue employment of its workers even after their retirement age.
The companies, in the meantime, understand the need to extend the retiring age but are concerned about the extension becoming mandatory as they worry about higher labor costs and a decline in new recruits.
“Extending the retirement age should solely be up to the companies,” said Yoo Jin-sung, a researcher at the state-run Korea Economic Research Institute. “If the extension becomes mandatory, the government should promote a wage system reform given the burden on the companies.”
The government’s approach is to have companies adopt a continuous employment system that is linked to a wage system reform so that they are able to utilize the abundant skills and experience of senior workers to spur growth in the Korean economy.
The government had planned to complete a social discussion by June but the plan is facing a setback as the labor circle is refusing to participate in the discussion.
By Lee Yu-sup, Lee Jin-han, and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]