A question of balance: Gov't struggles to extend retirement age

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A question of balance: Gov't struggles to extend retirement age

Published: 10 Nov. 2025, 07:00 Updated: 13 Nov. 2025, 10:43

Audio report: written by reporters, read by AI

Kim Dong-myung, center, the head of the Federation of Korean Trade Unions, speaks during a joint press conference held by the country’s two major labor unions at the National Assembly in western Seoul on Nov. 5. [LIM HYUN-DONG]

Extending the retirement age is a question of balance, as the government has to juggle filling the wage gap, increasing youth employment rates and minimizing any burden on corporations. Though the Democratic Party (DP) launched a task force in April to address this issue, progress has remained slow.

Labor and management continue to stand on opposing sides, and discussions within the DP have stalled due to the issue's complexity, despite mounting pressure from the country's two largest labor unions.

Timeline: A key sticking point

The task force is leaning toward a plan that combines extending the legal retirement age and expanding the re-employment system, according to the JoongAng Ilbo on Thursday. Under this plan, the statutory retirement age would rise gradually — with re-employment programs doing the same in parallel — until a target year.

For instance, if the legal retirement age is raised to 61 starting in 2027, those born in 1967 would be guaranteed job security until they are 61 years old. They would then be able to continue working under re-employment contracts until they turn 63, the pension eligibility age.

However, most experts agree that achieving a retirement age of 65 by 2033 — the target year stated in a national policy goal — is unrealistic.

“Even if legislation is passed this year, there still needs to be a preparation period, so the earliest possible implementation date would be January 2027,” a task force member said. “To raise the legal retirement age to 65 by 2033, it would have to increase by one year every year, which is practically impossible.”

An earlier target year would expand the number of workers eligible for extended retirement, while a delayed one would broaden the scope of those subject to re-employment instead. Similarly, an early implementation would increase labor costs for companies, while a delayed one could widen income inequality among workers, depending on whether they qualify for the extension.

At one point, the task force considered setting 2029 as the starting year and completing the 65-year goal by 2041, but the plan was dropped amid strong opposition from unions. The key point of contention now lies in the completion date — between 2033 and 2041.

Members of the Incheon Airport branch of the Korean Public Service and Transport Workers’ Union chant during the second day of their general strike at Incheon International Airport’s Terminal 1 on Oct. 2. [YONHAP]

Laborers want negotiation, but businesses seek exceptions

Another challenge is determining how to adjust the wages of workers whose retirement would be pushed back.

Businesses argue that under the current seniority-based pay system, extending the retirement age without reforming the wage structure would be too heavy a financial burden.

Labor unions have told the task force they are open to discussing reforms to the system, but only within the scope of collective bargaining. Analysts say large unions believe they have enough leverage to negotiate favorable terms.

In contrast, businesses are demanding that the “disadvantageous changes” to workplace regulations be eased.

Under existing law, changing a wage system requires the consent of a majority of employees or union representatives. Employers want this requirement relaxed so they can introduce new pay structures without prior agreement.

They are also calling for legal revisions that would allow broader wage reform across the workforce — not just for older workers — though such changes would require amending the Labor Standards Act, which makes them unlikely to happen anytime soon.

As a compromise, the task force is considering adding a clause to Article 19 (2) of the Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion, which currently stipulates that “companies must take necessary measures, such as adjusting the wage system.” The new clause would specify that wages may be adjusted in proportion to job duties or working hours, but blanket pay cuts would remain prohibited.

Unionized airport workers rally in front of Incheon International Airport Terminal 1 on Oct. 2. [NEWS1]

Re-employment: Obligation or encouragement?

Labor and management are also divided on whether re-employment should be mandatory or simply encouraged. If made mandatory, all workers who wish to continue must be rehired unless they have health issues. If made voluntary, employers can select which workers to rehire.

Business leaders say selective rehiring is essential for motivation and productivity, but unions argue it could be abused to exclude unionized workers.

Most task force members reportedly consider selective rehiring unrealistic.

Discussions also include broader “package measures” to offset any negative impact on youth employment. One idea is to offer subsidies tied to new recruitment rates. In the public sector, extended positions could be excluded from the total headcount or exempted from personnel evaluation penalties.

The labor union council of bus drivers in Gyeonggi negotiates with employers during a final mediation session at the Gyeonggi Labor Relations Commission in Suwon, Gyeonggi, on Sept. 30. [NEWS1]

Political decision the final hurdle

With neither side willing to yield, the matter increasingly hinges on political leadership.

Unions are urging lawmakers to pass a bill before the year's end, but few in politics are ready to make that promise.

When asked whether the DP would push for legislation within the year, party spokesperson Kim Hyun-jung said, “It’s too early to make a definitive statement,” adding, “The final plan must reflect a thorough discussion and consensus among labor, management and the younger generation.”

Some youth representatives also emphasized that social consensus should take precedence over speed.

“I’m concerned that the debate is overly focused on the timeline,” Kim Seol, the head of the youth community union and a member of the pension reform committee, told the JoongAng Ilbo. “This issue is fundamentally about social consensus.

“If labor is willing to make some concessions on wages, employers should respond by expanding youth hiring. We need mechanisms that ease conflict between labor and management — and between generations.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM YEON-JOO [[email protected]]