The gray rhino is comingJANG JOO-YOUNG
The author is a national news editor of the JoongAng Ilbo.
In 2013, World Policy Institute President Michele Wucker proposed the concept of “gray rhino” at the Davos Forum. It refers to a grave situation that was neglected even though it could have been predicted and responded to. A rhino is longer than 3 meters (10 feet) and weighs over 2 tons. So, if a rhino approaches, anyone would be able to hear and feel the shaking of the ground. Wucker cited the 2007 subprime mortgage crisis as the notable example of the gray rhino.
The Korean pension reform is in a similar situation. If the National Pension Service (NPS) maintains the current system, it will have greater expenditure than income and be in a deficit by 2039. The 740-trillion-won ($617.6 billion) fund will run out by 2055. The Korea Economic Research Institute (KERI) under the Federation of Korean Industries (KFI) issued a report on Feb. 13. The report said, “People born after 1990, who will be eligible for benefits in 2055, will not be able to receive a single penny of pension.” It is based on the premise that the government is not making any efforts. But it is evidence that pension reform is necessary.
Despite the urgent situation, pension reform is not speeding up. Administrations would “try” at the beginning but end up saying, “It didn’t work,” and the vicious cycle is repeated. After the Roh Moo-hyun administration lowered the income replacement rate to 40 percent by 2028, reform has still been at a standstill for 15 years. Though it is not easy to reach a social consensus, pension reform must be attained to not transfer burdens to the future generation.
At the televised presidential debate on Feb. 3, minor opposition People’s Party (PP) candidate Ahn Cheol-soo said, “How about making a joint declaration here to pursue national pension reform no matter who wins?” Ruling Democratic Party (DP) candidate Lee Jae-myung said it was a good idea, and his rival Yoon Suk-yeol from the main opposition People Power Party (PPP) said, “As we cannot avoid the problem, let’s make a promise now.” Justice Party’s Shim Sang-jeong also agreed with a smile. It was a spontaneous agreement, but was a positive sign as they promised pension reform to “pay more and get less” when candidates often make promises to please the voters.
As a follow-up measure, I hope each candidate would present a detailed action plan for the pension reform, including a method and timeline. Pension reform cannot be easily attained with a declarative agreement. The vibration shaking the earth has been felt for a while now. The time to meet the fiercely charging gray rhinoceros is drawing near.