Extending Retirement Age Beyond 60 Becomes Top Priority for Unionized Workers in Korea
Key Highlights :
As the Korean population continues to age and the workforce is set to shrink due to the retirement of baby boomers, unionized workers at major Korean companies have made extending the retirement age beyond 60 a top priority in this year's collective bargaining talks. This demand has been increasingly gaining momentum as the government is looking to induce companies to retain senior workers in the aging society.
Kia's union has called for the extension of the retirement age from 60 to 62, in order to address the so-called "income crevasse" or the period between a worker's retirement and the start of a retiree receiving national pension payments at 63. Hyundai Motor, on the other hand, is facing even more pressure from its union to extend the retirement age to 64, as those retiring after 2033 will be able to start receiving the national pension when they become 65 years old following the changes.
In a survey of the union's leaders, 66.9 percent of respondents answered that the extension of the retirement age is the most urgent issue in this year's collective bargaining talks. Considering Hyundai Motor posted record earnings last year, some industry watchers expect the carmaker's management to ask the union to choose between the extension of the retirement age or a higher wage increase.
Other companies such as Samsung Group affiliates, POSCO, HD Hyundai affiliates, and Hanwha Ocean have also been asked to extend the retirement age. While most companies agree on the necessity of extending the retirement age, they also claim that reforms in wage systems should come first in order to get young jobseekers employed.
The Korea Enterprises Federation said last December that a single beneficiary of the extended retirement age can reduce one permanent position, and even two permanent positions in a company adopting a seniority-based pay system. This highlights the importance of abolishing the seniority-based pay system in order to prevent the extension of the retirement age from having a negative impact on the creation of jobs for young people.
Overall, the extension of the retirement age beyond 60 is becoming a top priority for unionized workers in Korea, as they look to address the looming labor shortage and the income crevasse. Companies are also aware of the necessity of extending the retirement age, but they are also asking for reforms in the wage system in order to protect the job opportunities for young people.
