Eight in 10 firms with rehire programs screen retirees by job performance, survey finds

Eight in 10 companies that operate post-retirement rehiring programs selectively screen candidates based on job performance and skills rather than rehiring all retirees, a new survey shows. More than half of the companies surveyed also said a mandatory extension of the retirement age to 65 would force them to take additional measures, including restructuring wages or cutting new hires.

The Korea Employers Federation on Wednesday released findings from a survey of 500 companies nationwide with 30 or more employees, examining how firms operate post-retirement rehiring systems and what policy changes they want.

Among companies that already run or are considering a post-retirement rehiring system, 80.4 percent practice "selective rehiring" based on staffing needs and candidate qualifications. Breaking that down, 58.8 percent rehire some retirees based on need, while 21.6 percent rehire most retirees who meet a set standard. Only 19.6 percent rehire all applicants who wish to return.

The most common criterion for selecting rehires was "job performance and work results," cited by 59.5 percent of respondents. That was followed by "scarcity of skills or know-how and the need to pass them on" at 44.8 percent, and "physical and mental health and ability to perform job duties" at 43.8 percent.

On pay, 59.0 percent of companies said rehired workers receive the same wages as before retirement. Some 34.2 percent said pay decreases after rehiring, while 6.8 percent said it increases. Among those reporting a pay cut, the average reduction was 20.6 percent.

The biggest concern companies cited in the rehiring process was "legal risk when adjusting working conditions such as wages," flagged by 47.1 percent of respondents. That was followed by "risk of disputes during contract termination or renewal" at 39.2 percent, and "potential discrimination claims related to age" at 29.4 percent.

Concerns about a mandatory retirement age extension were also widespread. Some 52.4 percent of respondents said a uniform raise of the statutory retirement age to 65 would require additional measures. The most common response was "restructuring the wage system," at 34.4 percent, followed by "reducing new hires" and "scaling back or abolishing rehiring programs," each at 25.2 percent, and "workforce restructuring through voluntary retirement programs" at 15.3 percent.

The federation warned that a blanket retirement age extension could deepen labor cost burdens and promotion bottlenecks, leading to side effects such as fewer youth hires and broader workforce restructuring.

"In a super-aged society, the labor market paradigm needs to shift toward deploying workers based on job function and productivity rather than age," said Lee Sang-cheol, head of the federation's employment and social policy division. "More companies are already adopting and running rehiring systems, but the programs are not spreading widely enough due to legal dispute risks and a lack of incentives."

Lee added that resolving legal uncertainty in the post-retirement rehiring process is urgent, as is building an institutional foundation to support a shift toward job- and performance-based wage systems. He called for effective legislative measures, including special provisions to ease the process of revising workplace rules and the enactment of a special law on rehiring.