Seoul plans performance based rehiring to keep retirees working as its workforce shrinks

A second career instead of a higher retirement age

Seoul is preparing to test a system that would bring retirees back to work on flexible contracts, with pay based on their duties and performance rather than their years of service. As of November 7, 2025, the plan calls for public sector pilots in 2026, expansion to all city institutions by 2028, and participation by private employers after 2029.

The proposal addresses a striking gap in South Korea's working lives. Koreans leave their main career jobs at around 49 on average, yet many want to work until roughly 69. That difference of about 20 years leaves households searching for income and employers losing experience, even as Seoul's population ages and its supply of workers declines.

Government figures show that more than 10 million people aged 55 to 79 are working or looking for work. They account for close to 60 percent of that age group, the highest level since records began in 2005. Seoul's challenge is to help more of these people find reliable work with fair pay while keeping opportunities open for younger employees.

The city funded Seoul Institute has developed a blueprint for structured reemployment. Retirees would return in roles with fewer hours or defined projects, using shorter contracts that could be renewed. Their pay would reflect the value of the job and the work completed, instead of following a salary ladder based mainly on how long they have been employed.

In March 2025, Seoul Mayor Oh Se hoon said the city would consider formally introducing continued employment. He described the approach as a potential new growth engine for Korea's aging economy. The city's aim is to preserve knowledge, ease shortages in care and service work, and give older residents income and purpose.

Where the pilots would begin

Municipal agencies, information technology operations, research institutes, and services for older adults are first in line for the pilots. These workplaces would test whether reduced hours, performance based pay, and clearer job descriptions improve productivity, staff morale, and service quality.

Seoul intends to extend the model to all institutions run by the city by 2028 if the pilots work. Private employers across the capital would be invited to participate after 2029. Planned incentives include wage subsidies, tax benefits, and management consulting to help companies change jobs and evaluation systems.

The city presents the proposal as more than a way to reduce employment costs. The trials are meant to examine whether pay based on job value matches actual responsibilities and results, and whether new roles improve quality without placing too much pressure on older staff.

Employers would receive help with analysing jobs and choosing evaluation tools. The city also plans to publish templates for contracts, job descriptions, and assessments, giving organisations a starting point for changes that may otherwise be difficult to manage.

Why Seoul is taking a different route from retirement at 65

National lawmakers have debated increasing the statutory retirement age from 60 to 65, with proposals to reach 65 by 2033. Seoul's approach would change what happens after retirement instead of introducing a blanket increase in the age at which employees leave.

The Seoul Institute argues that structured reemployment could be more flexible and fair. A single retirement age applies the same rule to people doing physically demanding work and those working at desks, and to employers as different as small contractors and large research laboratories.

The institute's approach places attention on the quality of jobs after retirement and the rules governing their pay. Workers would have more scope to adjust hours and duties, while employers could retain skills in roles suited to their needs.

Kim Ki duk, a labor lawyer in Seoul, warned that increasing the retirement age without changing wage practices could extend the period in which older employees face salary reductions.

Simply raising the retirement age to 65 would give companies more years to apply discriminatory wage cuts under the current system.

His criticism concerns the peak wage practice, which reduces salaries for older employees during the years before mandatory retirement. Retirement rules and wage rules are connected: extending employment under an unchanged pay system could mean a longer period of reduced earnings and disputes.

What a rehired worker's job could look like

City officials and researchers expect many returning retirees to do work that depends on experience, judgment, and consistency. Contracts could cover a limited period and be renewed following reviews of agreed goals, work quality, and outcomes.

A manager working full time at 60 might move to a mentoring role for three days a week. An engineer might take responsibility for quality assurance on particular product lines. These examples illustrate a gradual transition from a main career job to a different role, with fewer hours or a narrower set of tasks.

Possible duties include mentoring and training, quality control, safety oversight, communication with clients, documentation and standards, defining project requirements, and improving work processes. Keeping experienced staff involved in these activities can preserve an organisation's memory and help prevent expensive errors.

In care services, returning workers could coordinate schedules, supervise teams, and communicate with families. In research units, senior employees could support grant reviews, compliance work, and experimental protocols while younger researchers lead fieldwork.

Pay would be matched to responsibilities and measurable performance. Clear role descriptions, transparent criteria, and regular feedback would be needed to connect each job to an appropriate pay band. For these roles, increases based on seniority would give way to reviews against agreed targets.

Workers accustomed to salaries rising with years of service may find this unfamiliar. Management consulting and training are therefore part of the proposed support, intended to build confidence in how jobs are defined and assessed.

Japan's experience offers lessons on pay and status

Japan is the closest reference point for Seoul's proposal. Companies there often let employees continue working after the retirement age set by the company until they qualify for a pension, frequently through contracts or work with fewer hours.

Older employees commonly move into mentoring, quality assurance, or support duties that suit their experience and physical capacity. Japanese firms report that clear job boundaries and consistent assessments are essential because uncertainty can leave workers frustrated about their pay and position.

A new contract accompanied by a steep pay cut can damage morale and weaken gains in productivity. Seoul's plan seeks to address that risk by designing roles more carefully and linking pay to the value of the work.

Realistic goals and a voice for older workers in deciding schedules and duties would matter alongside the contract itself. Seoul also wants returning retirees to take support and advisory roles that leave room for younger employees to become leaders and advance through promotion tracks.

The household cost of retirement and wage cuts

South Korea has one of the highest rates of poverty among older people in the developed world. Human Rights Watch has documented how mandatory retirement and peak wage arrangements move many older workers out of their main jobs and into work with lower pay and less security.

Government data show that workers aged 60 and over earn close to 30 percent less on average than those under 60. Many older people work in insecure positions, including as security guards or care aides, with limited protections.

Pay reductions before retirement can reach half of an employee's previous salary. They weaken household finances and reduce pension contributions, affecting both current income and the money available later in life.

Bridget Sleap, a researcher with Human Rights Watch, described the harm caused by employment policies that use age to determine whether people can remain in their jobs and what they are paid.

They deny older workers the opportunity to continue working in their main jobs, pay them less, and push them into lower paid, precarious work, all just because of their age.

Gwon Oh Hoon, a 52 year old attorney in Seoul, described being sidelined after years of service in testimony collected by rights researchers.

It is an infringement of human dignity. Just because I am older, I cannot work where I have worked my entire life.

Critics argue that these practices make age, rather than ability, the deciding factor. Seoul's pilots cannot rewrite national law, but they can test whether different pay rules and assessments reduce age bias within organisations. The practical test is whether returning workers receive stable, meaningful jobs with clear expectations and fair pay, rather than lower quality employment under a new name.

How performance reviews could be made fair

South Korea's law against age discrimination still allows employers to set a mandatory retirement age at 60 or above. That legal setting matters when retirees move onto new contracts, particularly if assessment criteria are unclear or older employees are placed in inferior roles without a choice.

Employers would need written job descriptions, transparent scoring, records of reviews, and a straightforward way to appeal decisions. A performance system depends on workers understanding what they are expected to do and how their work will be judged.

The Later Life Workplace Index, adapted in South Korea and several other countries, offers a framework for assessing leadership, work design, health management, knowledge transfer, and the transition to retirement. Employers can use such tools to set measurable goals, compare outcomes across age groups, and identify bias.

Training managers to recognise age stereotypes, creating teams with people of different ages, and giving older employees access to development and certification can help keep reviews focused on the work. Practical safeguards include:

• Define duties and expected results before negotiating pay.
• Use measurable indicators where possible, including error rates, client satisfaction, and project delivery.
• Offer choices about schedules and duties that take account of health and skills.
• Create coaching roles that capture and reward experienced workers' knowledge.
• Provide reviews and appeals so mistakes can be corrected quickly.

A shrinking workforce and growing care needs

Seoul's population of working age peaked in 2009 and is projected to fall by about 43 percent by 2052. The expected decline is sharper than the national average, making the loss of experienced employees harder for the capital to absorb.

By the middle of the century, nearly two thirds of Seoul residents aged 65 and older are expected to be at least 75. Almost one in four of that older population will be over 85. The city therefore faces both fewer people of working age and an older population with substantial care needs.

Care and service jobs already face shortages, and older workers account for a growing share of employees in those sectors. Retaining experienced staff, even for fewer hours, could help keep services steady for the families that depend on them.

Employers could also gain a more predictable supply of experienced labor, reducing the cost of recruitment and training while protecting quality. In research and engineering, practical knowledge built through years of work and professional networks can be difficult to replace.

Calls for wider pay reform to retain highly skilled workers include better incentives and clearer career paths beyond retirement. Seoul's proposed model offers one way to keep senior expertise available while preserving opportunities for younger recruits.

Pension pressure adds urgency

South Korea's national pension system also faces financial pressure. The government has proposed raising combined pension contributions from 9 percent of income to 13 percent, alongside measures to improve returns over time and coverage.

The proposed contribution increase is four percentage points. It would mean a larger share of income going into the pension system, which faces the possibility of its large fund being depleted in the 2050s without changes.

Policymakers have discussed aligning retirement with pension eligibility as the eligibility age rises to 65 by 2033. Continued employment could help households avoid years with little work and limited access to pension income.

Seoul's proposal connects that income problem with employers' need for experienced staff. A worker who can move gradually into a suitable paid role may have a smoother transition than someone who loses a main career job and must search for less secure work.

What employers gain and what they worry about

Companies often fear that keeping older employees will increase costs and block promotions. The proposed model responds by moving experienced workers into roles that support teams without occupying the next management position. Pay would follow the work performed rather than tenure.

Wage subsidies, tax benefits, and consulting support are intended to help cover the cost of analysing jobs, changing assessments, and training managers. These changes require administrative work before an employer can judge whether the arrangement is worthwhile.

Small and midsize firms may find that workload especially difficult. Contract and assessment templates, together with management support, could make participation easier.

The business case would become stronger if the pilots produced higher productivity, fewer errors, and better client satisfaction. Weak results would put pressure on Seoul to revise the model before its planned expansion in 2028 and the invitation to private employers after 2029.

The timetable and the results to watch

Seoul's programme remains a planned trial as of November 7, 2025. The schedule sets out stages for introduction and expansion, with the public sector providing the first opportunity to assess how the contracts work.

• March 2025: Mayor Oh Se hoon said Seoul would consider formally introducing continued employment.
• 2026: Public sector pilots are scheduled to begin.
• By 2028: Seoul plans expansion to all city institutions if the pilots succeed.
• After 2029: Private employers would be invited to participate with support packages.
• 2033: National proposals envisage a retirement age of 65, while pension eligibility is also set to reach 65.

The National Assembly will continue debating retirement age changes and pension reform alongside the city's work. Results from Seoul could inform that discussion by showing how rehiring affects productivity, fairness, and worker satisfaction.

Useful measures include how many retirees return, whether productivity and service quality change, and how often disputes arise. Assessments should also track younger staff retention, satisfaction among both age groups, and whether advisory roles preserve routes to promotion.

Contract data would need to show whether the new jobs genuinely involve fewer hours or defined projects, whether salaries match written duties, and whether older employees receive training and development. Transparent reporting would help workers, unions, and employers judge whether the programme delivers its promises.

What to Know

• Seoul plans to rehire retirees through flexible contracts with pay based on job value and performance, instead of relying on a blanket retirement age increase.
• Koreans leave their main career jobs at around 49 on average, while many want to work until roughly 69.
• More than 10 million people aged 55 to 79 are working or seeking work, close to 60 percent of that age group.
• Public sector pilots are scheduled for 2026, with expansion to all city institutions by 2028 and private participation after 2029.
• Possible roles include mentoring, quality control, safety oversight, care coordination, and research support.
• Planned employer support includes wage subsidies, tax benefits, consulting, and templates for contracts and assessments.
• Fair pay, clear reviews, worker choice, and opportunities for younger staff are central tests of the model.
• Seoul's population of working age is projected to fall by about 43 percent by 2052, adding urgency to efforts to retain experienced employees.