An issue that cannot wait

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An issue that cannot wait

The government has begun to address the issue of raising the statutory retirement age in Korea. Deputy Prime Minister for the Economy Hong Nam-ki said demographic changes demand that our society discuss raising the retirement age. The Supreme Court in February ruled that the maximum age a person can perform physical labor should be extended to 65, breaking the 60-year threshold.

Korea’s working population aged between 15 and 64 has been dropping because of its very low birthrate and aging population. Statistics Korea estimates the economically active population will drop by 325,000 on average a year until 2029, which will lead to a reduction in income and consumption. Under such circumstances, raising the retirement age is urgent.

But creating a social consensus will not be easy due to conflicts of interests. First, youth unemployment, which shows few signs of improvement, could worsen. Hong claimed joblessness for the young could ease as baby-boomers born from 1955 to 1963 will be retiring by an average 800,000 a year over the next decade whereas the number of teens joining the job market will total 400,000 a year. But this does pan out in reality, as can be seen in Japan, which struggled with youth joblessness for decades.

The Asahi Shimbun estimates the number of hikikomori — which refers to social withdrawals — aged between 40 and 64 at 610,000. They remain outliers despite the current job surplus in Japan. Although the retirement age was pushed up to 65 in 2013, the generation that started its career poorly can hardly catch up. Korea also has a similar rigid labor market structure. The current job crisis for the young could become a lasting problem society.

Pension discrepancies are also a matter of potential social conflict. Last year, the government mulled the option of deferring the pension subscription and receiving age by five and three years respectively so that pensioners pay up to the age of 65 and start collecting payouts at 68. The proposal was thrown out because of strong public protests. But pension reforms are needed to raise the retirement age.

The government must pay special mind to lower-income people, as the gap between the retirement age and pension-receiving age can be greater. Employers cannot afford the raised retirement age under our rigid wage system and labor market. The employment structure also needs to be reformed together with retirement age changes. The government must have rigorous discussions to come to an agreement.

JoongAng Ilbo, June 4, Page 34
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