The number of Korean people still working at 70 and above increased by 150,000 in the first half of this year from a year earlier. It was the largest increase since related statistics began to be compiled in 2018, according to Statistics Korea.
The population of employees aged 15 years and over expanded by 220,000, largely led by senior workers. Workers in their 60s and above increased by 282,000, posting the sharpest increase among age groups.
Considering Korea’s working-age population is set to contract sharply due to its low fertility and rapid aging, the data is noteworthy. Its fertility rate fell to 0.72 last year, the lowest in the world.
According to the Ministry of the Interior and Safety on Thursday, the population aged 65 and older surpassed 10 million on July 10. Over-65s now make up 19.5 percent of the total population, pushing Korea to the brink of the 20 percent threshold the World Health Organization uses to categorize super-aged societies.
Korea’s rapid aging and low fertility can cause complex problems in every corner of society. Among others, concerns are mounting that decreasing labor supply will lower productivity and erode growth potential.
The Bank of Korea forecast that if the country's second-generation baby boomers, born from 1964 to 1974 begin to retire this year, they would drag down annual growth by about 0.4 percentage points each year for the next decade.
According to Statistics Korea, the nation's working-age population aged 15 to 64 is on course to more than halve in the next 50 years.
Despite an increasing number of working seniors, the quality of jobs available to them is not so good. Researches show that middle-aged people tend to work at relatively low-skill, low-paying jobs after retirement. There is a need to find ways to make better use of retirees.
A recent labor deal at Hyundai Motor attracts attention in this light. Its labor and management agreed to rehire skilled retirees as temporary contract workers.
Under the collective bargaining accord, rehire contracts for blue-collar factory jobs will be extended by a year from the current one year. Retirees will be rehired but their wages will be on a similar level to that of new employees. The latest deal has effectively extended the retirement age to 62.
The company, for its part, will be able to secure more skilled technicians at low cost, while workers, for their part, will be able to mitigate the sudden loss of income after retirement.
The Organization for Economic Cooperation and Development advised in its biennial economic surveys on South Korea last week that extending working lives and boosting elderly employment would considerably improve Korea's GDP and fiscal outcomes.
To reform the labor market, the organization recommended introducing a flexible wage system tying wages to job characteristics and performance irrespective of age. Among other suggestions are raising the legal retirement age and phasing out company-specific mandatory retirement age.
And yet a detailed examination of the recommendations is necessary because they can cause generational conflicts over job opportunities for young people.
The Economic, Social and Labor Council, a presidential advisory board composed of representatives of the government, employers and labor, launched a new committee last month to discuss extending the retirement age and rehiring retirees.
Labor circles demand that the legal retirement age be increased in stages from the current 60 to 65 by 2027 to coincide the retirement age with the age when people insured by the national pension program begin to receive their pensions. Businesses argue that rehire and wage systems should be first restructured. The government plans to figure out a road map for reemployment in the second half of this year.
Longer working lives in response to a shrinking labor force are becoming an inevitable choice. Council members should pool their wisdom from wide-ranging opinions and discussions to draw up the right road map.
