[VIEWPOINT]Live long and prosper?

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[VIEWPOINT]Live long and prosper?

What is the most precious thing we can get from economic growth? Most people might reply simply that we can live better. Roughly calculated, since we started developing our economy in earnest in the early 1960s, inflation and population growth considered, our real income per capita has risen nearly 10 times over the past 40 years. This is quite an achievement, to be sure.
But there is more to economic growth than just “living better.” The average Korean life span was only 56 in the early 1960s. Now an average Korean lives 77 years, the same life span as in advanced countries. Perhaps the biggest fruit of our economic growth is having increased our average life span by over 20 years.
Through economic growth, we have been able to achieve both a better quality of life and a longer life span. This does not pertain only to us but to all societies, including the more advanced countries, that achieved modernization. The British, who started the industrial revolution first, began to enjoy better and longer lives starting in the 18th century. The United States and other more advanced European countries saw a similar phenomenon in the 19th century. Other countries began to achieve a better quality of life and a longer life span starting in the 20th century.
The problem is that all the blessings of modernization and the problems of an aging society that those countries that achieved modernization confront are the head and tail of a coin. From the point of society as a whole, there is the problem of dwindling economic productivity and imbalance in the supply and demand of pensions. From the perspective of a retired aged individual, not only is economic survival after retirement a problem but there are just too many years to be “retired.” As our economic growth was faster than most other countries, the aging society problems are in progress at an almost unprecedented speed as well. That is why despite the fact that our economy has yet to cross the threshold of joining the ranks of advanced countries, we are worrying and looking, together with advanced countries, for answers to the same difficult issues of an aging society.
In advanced countries, the average age of retirement has long been raised from 60 to 65 and then to 67. On the other hand, the average retirement age in Korea actually went down after the Asian financial crisis in 1997 and is now approaching the early fifties. It is doubtful that we can maintain this trend. According to a recent study by the Korea Labor Institute, the average Korean worker starts working at the age of 27 and retires from work at 54, but has the will to work in the form of simple labor or private businesses until 68. This means that our workers are as aware as the workers in advanced countries of the necessity of working longer.
In fact, the percentage of those in the senior age category working in Korea is higher than that in other more advanced countries.
But to spend only two-thirds of the 41 years that one is willing to work in one job and then to spend the remaining one-third of those years, about 14, in another job is highly unproductive. Our society must come up with a solution to this problem. It is a relief to see that there are already many discussions taking place on how to increase job opportunities for the aged.
The biggest stumbling block here is the “age bubble.” The seniority system of salaries that is still prevalent in Korea makes employers naturally avoid hiring an aged individual whose productivity does not reach satisfactory levels in relation to the salary or wages he commands. The worker, in turn, expects a level of pay that would be socially and traditionally given to those of his or her age.
A payment and labor cost that is not based on productivity inherently creates “bubbles.” Payment according to seniority and age could be seen as one of the biggest bubbles in our economy and could ironically be the largest obstacle to the solution to the aged worker problem. It will not be easy changing the custom of putting seniority above actual productivity in our Confucianism-based society. Moreover, it would also be undesirable to make productivity the one and only criteria to run our economy and society.
But changing our society’s mentality to put more weight on productivity than seniority will be the key to getting the benefits of the two blessings of economic growth.

* The writer is a research fellow at the Korea Institute of Public Finance. Translation by the JoongAng Daily staff.

by John M. Kim
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