Lotte Mart has joined a small but growing number of companies that help people continue to work beyond its mandatory retirement age, which is set at 55. The discount store chain announced Monday it would hire 1,000 senior employees aged between 56 and 60 under indefinite-term contracts this year.
According to the company, the senior workers will be treated the same as regular employees. They will be entitled to the four social insurance benefits ― national pension, health insurance, employment insurance and industrial accident compensation insurance ― as well as other fringe benefits, including bonuses, vacation allowances and expenses for congratulations and condolences.
One major difference is that the senior employees will be paid on an hourly basis. This payment scheme is reasonable, given that they can arrange their work schedule flexibly in consideration of their physical strength and leisure activities. They can work a maximum six hours a day, five days a week.
The company said it would also consider introducing a “silver worker program,” under which a senior employee who turns 61 is reclassified as a silver worker, who can continue to work until 70.
Lotte Mart’s plan is good news for baby boomers, the 7.1 million people born between 1955 and 1963 who started to retire in droves in 2010. A large number of baby boomer retirees are in need of a new job as the nation’s welfare system does not provide them with enough income to cover daily expenses.
The company’s scheme is expected to be emulated by other companies in the distribution and financial industries.
Homeplus Co., another discount store chain, went even further than Lotte Mart by extending its mandatory retirement age to 60. The company did not even introduce a peak wage system, which reduces a senior employee’s salary gradually in return for extending his retirement age.
Homeplus was the first company in Korea to push back retirement age by so much at once without applying a peak wage formula. The company said guaranteeing job security for its most senior, experienced employees would enhance its productivity and ensure sustained growth. Since 2008, the company has also hired people aged between 50 and 65 as silver workers.
The examples set by Lotte Mart and Homeplus should inspire other domestic companies that are reluctant to extend retirement ages or hire old people. They need to change their erroneous thinking that retaining senior employees would harm productivity.
The government also needs to encourage companies to reform their outdated personnel policies and create an environment where senior workers can make the best use of their business acumen and accumulated expertise.
