Yoon mulls extending retirement age of 60

SEJONG -- South Korea will embark on discussions and debates on extending the retirement age from the current 60, under the Yoon Suk-yeol administration’s economic policy approach to cope with workforce shortages caused by demographic change.

In a comprehensive plan on the economy unveiled last week, the government said it would foster a “task force to take countermeasures against workforce shortages,” which will comprise relevant ministries, think tanks and private researchers.

Under the guidance of First Vice Minister of Economy and Finance Bang Ki-sun, the task force is poised to announce a series of measures, to be taken on a medium-term basis, starting in July, according to the finance ministry.

The core issue is overcoming a rapid decline in the proportion of the population considered to be of working age, between 15-64, in a country that has the world’s lowest fertility rates.

According to public officials, one option is extending the retirement age from 60 to 65 or possibly even older. Some have suggested eliminating the retirement age altogether or letting businesses rehire retirees by creating legal ground or offering benefits.

Market insiders have warned that such measures may alarm younger workers who could see an extension of the retirement age as a threat to their employment prospects.

This may bring about conflicts between those in their 50s or 60s and those in their 20s or 30s. In addition, businesses will have no choice but to bear a higher burden of human resources costs.

Though previous administrations had also highlighted the seriousness of the imminent workforce shortages, neither the government nor National Assembly has yet to put forward any meaningful legislation.

According to Statistics Korea, the working-age population is projected to decline by 35.3 percent over the next three decades, from 37.38 million in 2020 to 24.19 million in 2050.

The state agency also forecasted that the “core” working-age population, those aged between 25-49, will fall from 36.8 percent to 23.1 percent during the corresponding period.

Under the expected demographic change, there is a high possibility that the nation’s productivity will critically weaken, with state and social costs for supporting the senior population skyrocketing.

Statistics Korea predicts that seniors will make up around 25 percent by 2030, from the current level of about 16 percent. This means 1 out of every 4 Koreans will be aged 65 and above in less than a decade.

From early 2030, the senior population will include the “second baby boomer generation,” which refers to those born between the late 1960s and early 1970s.

It is also estimated that, if current trends hold, the proportion of senior citizens in Korea will surpass the 30 percent mark in 2036, 40 percent in 2051 and 45 percent in 2063.

Government officials estimated that the nation will see about 800,000 retirees per annum in the 2020s.

“The retirement age extension would be acceptable, unless it deprives the youth of employment opportunities or causes the first age someone can claim national pension to be also extended,” said a stock brokerage-based researcher.

Young salaried people are continuously voicing concerns over the depletion of National Pension Service funds or a delay of their annuity payments when they retire, he said.

By Kim Yon-se (kys@heraldcorp.com)