“Unconditionally extending the retirement age to 65 could reduce employment for young people” … Korea Employers Federation proposes Japan-style re-employment

The Korea Employers Federation (KEF) published a report titled “Examples of Extending the Retirement Age in Japan and Their Implications” on the 11th, focusing on the realities of Japan’s employment system for older workers and its re-employment-centered operation. KEF conducted a field study in Japan and outlined the current state of employment for older people and key points in system design. It said that, rather than uniformly raising the current statutory retirement age from 60 to 65, a flexible system centered on re-employment should be considered.

Instead of immediately raising the retirement age to 65, Japan’s system allows companies to choose among re-employment, extending the retirement age and abolishing the retirement age. The stated aim is to maintain employment for older people while securing new hiring of young people, taking into account the employment environment during the employment ice age.

The system made it mandatory in 2013 to secure employment for all those who wished to continue working, and subsequently moved toward full implementation in stages. Although re-employed workers receive lower pay than before retirement, their employment opportunities continue, and the government and companies are said to have shared the costs while providing wage supplements and adapting job structures.

The report introduced examples of Japanese companies shifting toward pay structures based on job responsibilities and performance, as well as improving post-retirement job design through interviews before retirement. It noted that funds were allocated to raise the wages of re-employed workers. While Korea also needs to expand the use of older workers, the report emphasized the importance of designing systems that take the impact on employment for young people into account.