Make an elderly-friendly work environment

Those born between 1964 and 1974 when the Korean economy gained steam are dubbed the “second wave of baby boomers.” They are numbered at 9.54 million, taking up 18.6 percent of the total population. They will start joining the retirement age of 60 this year. According to a study by the Bank of Korea, their exit from the labor market could hurt Korea’s GDP growth rate by 0.38 percentage points annually from 2024 to 2034 if the employment rate of people in their 60s stays at the current level over the next 10 years.

The impact on the growth rate would narrow to 0.14 percentage points if the employment rate of those in their 60s keeps up the growth level of the last 10 years. If their employment rate rises sharply through proactive policies like the rehiring programs in Japan, the damage to the growth rate is expected to slim to 0.22 percentage points.

Members of the age group are eager to work after retirement, compared to senior boomers born between 1955 and 1963. They are also healthier, more educated and apt to use IT technology. They are rich human capital able to adapt to changes in the industrial structure.

Japan changed the Act on Stabilization of Employment of Elderly Persons in 2006 to oblige employers to allow people to work until 65 when pension benefits start — either through a stretch in retirement age, continued employment or an abolishment of the retirement age. Most companies choose continued employment, as they don’t have to maintain those employees’ salaries before turning 60 and working hour terms. We can benchmark Japan’s model that pushes back the retirement age while lessening the burden on employers.

Stretching the legal retirement age cannot work in Korea’s rigid labor environment, as it will only benefit employees of large companies and the public sector, which respect the mandatory retirement age. Most small and mid-sized companies short on labor are lax in abiding by the retirement age. An artificial extension of the retirement age will only harden youth employment in large companies and the public sector.

To fully utilize labor by the elderly, it is better to make society friendly toward elderly workers instead of forcing their employment through the law. As Lee Chul-hee, an economics professor at Seoul National University, argued in his book “Working People Are Disappearing,” Korea must become a country for the elderly and a society that doesn’t discriminate based on age. A country for the elderly can actually work for everyone. A work culture that measures a person based on ability, not age, will help create a society without age discrimination. We must establish a system and customs that appreciate individuals regardless of their age and reward them according to their performance and achievements.