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[NEWS ANALYSIS] Old and broke, more Koreans forgo retirement

Weak pension system drives many to job market late in life

Nov 12,2018
Older job seekers browse recruiting posts at a job fair held by the Ministry of Employment and Labor at a center in Yangjae-dong, southern Seoul. [YONHAP]
One might think turning 63 would be the time to prepare for, or have already planned, a more laid-back life. But for Oh Doo-hwan, a 64-year-old man living in Seoul, that was when he started his new job as a janitor.

After decades of running his own tourism and cosmetics businesses, he felt that the fields were too competitive and quit. He then came across a notice recruiting cleaners and applied.

“It’s hard to survive only on a public pension,” Oh said. “I hope I can work here for another 10 years.”

Top: Senior staff including Lee Eun-ho, right, distribute mailed packages at Sanggye Jung Apartment in northern Seoul on Oct. 24. Middle: A caretaker looks after seniors at a nursing home in Dobong District, northern Seoul on Nov.3. Above: Min Hoon-sik, 66, works as a security guard at Guro Station in southwestern Seoul on Oct. 22. [CJ LOGISTICS,JEON TAE-GYU, CHAE YuN-HWAN]
He is just one of an increasing number of old folks jumping at the chance to work mainly for financial reasons, and sometimes self-fulfillment. The phenomenon is called “unretirement.”

When the country reported a record low number of new hires earlier this year - less than 10,000 in July and August - one age group posted solid gains: people over 60.

The growing proportion of the elderly in the job market reflects a complex socio-economic problem facing Korea. In a country dominated by big, family-run conglomerates, there are few decent positions that guarantee a legal retirement age. Individuals retire only to realize that their pension is far below the minimum cost of living and that the social safety net is not sufficient. Then they have to reenter a work world where many positions are temporary or day-to-day.

Korea has one of the highest employment rates in the world for senior citizens. It also has a high rate of elderly poverty. The employment rate for those over 60 has been on the rise, and the age group added the largest number of new hires this year.

The employment rate of Koreans between 70 and 74 last year was 33.1 percent in 2017, according to Statistics Korea. That’s more than double the rate of Estonia, which has the highest employment rate for this age group among the 28 EU member countries. The Organization for Economic Cooperation and Development (OECD) average is 15.2 percent. Younger seniors have an even higher employment rate, at 45.5 percent for those between 65-69 and 60.6 percent for those between 60 and 64.

So in addition to having some of the longest working hours in the world, Korea also has some of the longest periods of employment.

Yu Seok-tai, a 64-year-old man who works subway security, said that his graying peers all hope to work in the future given the right opportunity.

“Now nobody would think 60 is the time for retirement,” Yoo said, “My uncle is 85 years old and he is still working. With this job, I don’t need to ask for help from my children and feel confident and rewarded.”

But more work doesn’t necessarily translate into affluence; the country has the highest elderly poverty rate in the OECD. According to the latest report by the organization, 45.7 percent of senior Koreans aged 65 or more were found living below the poverty line in 2015. Korea outranked other countries by a large margin:it was followed by Latvia, at 33 percent, and Estonia, at 31.9 percent.



A world without retirement

Behind the somber reality is a combination of larger structural problems in Korea: early retirement and a weak public pension system. The country’s legal retirement age is 60, but many employees at private companies are pressured to leave around 50 due to scarce posts for executive or high-ranking jobs.

“Unless you are in the public sector, you can’t work until 60,” said Park Man-moo, a 61-year-old man who left his apartment management job in his early 50s.

“A company is not allowed to fire you, but they can nudge you into leaving the job because they have many younger candidates,” he said.

On average, workers believe they will be made to retire at about 50, according to a survey done by Job Korea, a job listing site.

Since the state pension age is set at 65, many who are forced out of their job have to go out and find a new job.

“Because the age for receiving pension benefits is 65, many would face an interval after they actually retire,” said Kim Cheong-seok, a professor of sociology at Dongguk University.

What compounds the matter is that more than half of those over 65 are not even registered with the national pension system in the first place because many of them were born in a poverty-stricken era and couldn’t land secure jobs offering pensions.

Only 39.5 percent of those over 65 signed up for the national pension program in 2017, according to the National Pension Service.

Elderly people who are not eligible for pensions rely on the basic state pension and their children, though the government’s monthly payout of 200,000 won ($177) falls short of the minimum living cost at one million won per person.

“My sole income comes from the government at around 200,000 won,” said Kim Jong-won, an 81-year-old man who was passing the time at Tapgol Park in central Seoul during lunchtime.

“I want to work more, but no one will hire me after knowing my age.”

Numerous senior citizens like Kim gathered in the public park in central Seoul, sitting around or playing baduk, also known as the game Go.

Chun Chung-bae, another 81-year-old man at the park, is in an almost identical situation as Kim.

“My wife and I only get the basic pension. I worked until 76 as a security guard in an apartment complex, but that sort of position has become increasingly competitive among older men.”



Weak pension and lack of savings

Even if one is lucky to benefit from the national pension, the pension itself tends to be on the low side.

The average qualified person gets 330,000 won per month from the National Pension Service. Nearly 77 percent of the all pensioners end up with less than 500,000 won per month.

Older people over 65 often have insufficient savings as the majority of earnings were spent supporting their children through college years or longer. Seniors also tend to have a poor understanding of finance and insufficient access to financial planning after retirement.

“Old parents devote their earnings to educating and raising children,” said Koo Jeong-Woo, a sociology professor at Sungkyunkwan University. “They might have thought that child-rearing would turn into an investment for the future.”

Both Chun and Kim at the Tapgol Park said that they receive allowances from their children.

But the heavy reliance on children comes with its own set of risks as it puts a financial burden on the younger generation.

Koo noted that the short history of the national pension system makes it hard to adequately support the elderly.

“Only recently did the system become institutionalized,” the professor said, “So, the management skill and the amount of pensions all fall short of expectations.”



Government steps in

While the pension system needs to be improved, the reform of the system will take a long time, and a wide range of discussions and political wrangling are inevitable.

As a quicker solution, the Moon Jae-in government is focused on creating temporary posts reserved for seniors, both in the public sector and at private companies, given that less physically taxing jobs for seniors are few and far between.

The Korea Labor Force Development Institute for the Aged, a state-run agency that supports job-seeking seniors, acts as a central body to foster partnerships with corporate players to provide jobs. One of the most well known and successful examples is CJ Logistics’ package delivery program employing seniors.

The company hires seniors part-time and lets them deliver mail within apartment complexes instead of assigning them wide delivery areas.

Lee Eun-ho, a 79-year-old man, works four to five hours a day as a delivery man for Sanggye Jugong Apartment in Nowon District, northern Seoul.

“I ran my own business before, operating a bedding shop. After finishing the business, I took a delivery man post here,” he said.

Besides the delivery service, convenience store chains including CU, GS and Emart24 are hiring senior citizens as cashiers.

For female seniors, a caretaker job is one of the most common options because it virtually has no retirement age. Once one earns a license, he or she can continue to work as a caretaker longer than in other jobs.

“The retirement age is set differently from one nursing home to another,” said a 66-year-old caretaker whose surname is Kim.

“I was a stay-at-home mom until I was in my 50s, but I started working as a caretaker in 2008, as our family suffered from financial difficulties after my husband’s business went bankrupt,” said Kim who works at a nursing home in Dobong District, northern Seoul.

She can make a living, though she is not all that well-off. Kim said she makes around 1 million won a month; her hourly wage is the same as the minimum wage.

To serve the growing number of aged in need of long-term care at nursing facilities, the government established a licensing program for caretakers in 2008. Anyone passing the exam can work.

Some regional governments are looking into ways to help senior residents find a job. The Dongjak District Office in southern Seoul funded the establishment of a senior center to hire older residents as cleaning staff for public facilities.

Oh, a 64-year-old man living in the district was able to find the position through the center. Yoo Gam-soon, a 63-year-old woman living in Dongjak, also took on the cleaning job.

“The workload is not that heavy, and the center allows me to work until 75, which I think is good,” said Yoo.

Most of the seniors work for five hours each day for five or six days a week and earn around 1.3 million won a month.

Previously, the employees worked eight hours a day and the salary was 2.2 million won a month, but the center adjusted the terms as more people want to work.

Park Eun-ha, head of the center, said that it has matched around 90 seniors to cleaning positions, but many residents are in line to get hired.

“We know that people want to work longer and earn more, but we thought it was important to give more people an opportunity,” she said.

“Other regional offices want to follow our model for their residents,” she said.

But Professor Koo said that the government-led model is not sustainable.

“The government can play a supportive role, but the private sector should lead job creation so many jobs can be made available,” he said.



BY PARK EUN-JEE, CHAE YUN-HWAN [park.eunjee@joongang.co.kr]



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