Changing statutory retirementThe Japanese government has enacted a law raising the statutory retirement age from 60 to 65. It is the first time in nearly 20 years that Japan has changed the rule as it struggles to deal with its aging population.
If current trends hold, Japan’s working-age population will likely shrink to 57 million by 2030 from the current 66.5 million. Without a sufficient workforce, the world’s third-largest economy will not be able to sustain itself. This is why Japan’s business sector and society came to agreement on extending the retirement age despite the myriad of risks such as decreased productivity, higher labor costs and various other complications.
Korea is aging even faster than Japan. We also have to seriously consider revising the retirement age. Changing the mandatory retirement age would mean a new economic makeover with various social and welfare repercussions. Our working life span will change first. The typical Korean male gets a job at the age of 28 after finishing college and military service and retires at 53 - working for 25 years on average.
Working life here is too short compared to counterparts in Europe and America where people usually work for 40 years from 25 to 65. And early retirement isn’t always easy for Koreans. There are many problems with retiring at 53. Citizens can collect pension payments starting only at 61. So, they must somehow support themselves and their families for at least eight years. Raising the retirement age could reduce the gap period between retirement and pension eligibility and thus ease jitters felt by the aging.
Raising the ceiling on retirement could be burdensome for employers. Japanese companies estimate the higher retirement age could cost them 300 billion yen ($3.2 billion) in extra labor costs each year. Business profitability will inevitably fall. Japan will have to come up with supplementary measures by helping businesses adjust wages or offering financial assistance.
Of course, raising the retirement age is not a solution to all labor problems. If fact, it could create additional issues.
For instance, preferential treatment for senior workers could trigger resentment from younger people who fear they will find it harder to get decent jobs if older people don’t leave the workforce.
The ministry has proposed raising the retirement age to 60 in increments from 2017.
In the meantime, the government should work on measures to ease the corporate burden and generational gap.