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Collection of full-length papers and in-depth analysis of economic and management issues.

Maintaining Employment among 
Older White-collar Workers

Maintaining Employment among Older White-collar Workers

TAE Won-You

Feb. 26, 2013

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Older White-collar Workers
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Originally released on December 26, 2012

The number of white-collar workers has increased dramatically due to changes in Korea’s industrial structure. Share for white-collar workers aged 45-59 among all wage earners nearly doubled, rising from 12.2% (380,000 persons) in 2000 to 21.3% (910,000 persons) in 2011. At the same time the average length of service for white-collar workers is declining. According to a survey conducted by Samsung Economic Research Institute, the current actual average age at which white-collar workers are pushed into retirement is 53.9, 3.8 years shorter than the average mandatory retirement age (57.7 years) established by Korean companies. Such early retirement can lead to reduced income, loss of company know-how, and increased burdens for welfare spending. Five major reasons account for the early retirement of white collar workers: high pay (Wages), diminishing job positions (Harmony), declining productivity (Image), difficulty in changing careers (Transfer), and decreasing organizational vitality (Energy).

There are five key tasks ahead to maintain employment stability for older workers. First, the introduction of ‘occupation-based differential retirement ages’ should be undertaken. Different retirement ages should be set according to occupation, reflecting the varying nature of retirement ages across different job duties. Second, a ‘wage peak system’ should be applied to white-collar employees when they turn 50. Companies can ease payroll burdens by freezing wages for five years starting at age 50 until the effective retirement age of 54, and then adjusting them to 70% of peak salary from 55 to 58. Third, employee responsiveness to change should be improved through ‘job retraining’. This can be done, as in the United States, through the use of community colleges that can retrain the 50-plus workforce. Fourth, various career path options, including career changes, should be made available. Impending retirees need to actively explore new job opportunities elsewhere through career changes, relocation a n d social responsibility jobs. Fifth, an age-friendly work environment should be created along with flexibilization of work hours and types. This has already begun in Japan, where a majority of older workers work part-time, not full-time.

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