SEOUL: As South Korea’s ruling Democratic Party of Korea steps up to raise the statutory retirement age from 60 to 65, debate is intensifying over how the move could reshape the nation’s labour market, with the business community warning of higher costs and shrinking job prospects for young workers.
Raising the retirement age to 65 was one of President Lee Jae Myung’s key campaign pledges, aimed at addressing South Korea’s rapidly ageing population and delayed pension payouts.
The Democratic Party has vowed to introduce detailed legislation before the year’s end, but the wide gap between the labour and business positions appears to make its swift passage uncertain.
The initiative picked up steam following the party’s formal launch of a special committee on a retirement age extension on Nov 3, initiating discussions among representatives from the country’s two umbrella unions, the Korea Confederation of Trade Unions (KCTU) and the Federation of Korean Trade Unions (FKTU), and the Korea Enterprises Federation (KEF), a business lobby, to align their positions on the proposed law.
Multiple bills proposing a phased extension are already on the table, including one by Rep Park Hong-bae of the Democratic Party, seeking to gradually increase the statutory retirement age to 63 by 2027, 64 by 2032 and 65 from 2033, in line with national pension eligibility, which by then will also reach 65.
Additionally, labour advocates argue that raising the retirement age is essential in a rapidly ageing society, as the current gap between retirement and pension eligibility threatens the livelihood of older South Koreans.
South Korea’s current retirement age is 60, extended to all workplaces in 2017.
But the national pension system does not pay benefits until age 63 for those born between 1964 and 1973 – the so-called second baby boom generation.
By 2033, the pension payout age is set to rise to 65.
This three-to-five-year gap leaves many retirees without stable income, forcing them into low-paid or irregular jobs, advocates say.
Unions argue that extending the retirement age to 65 would bridge that gap, providing steady income until pensions begin and helping reduce old-age poverty, of which South Korea has the highest rate among Organisation for Economic Co-operation and Development nations.
Yang Kyung-su, head of the KCTU, emphasised that the retirement age extension is critical to tackling old-age poverty.
“Even if the birthrate rebounds today, the working-age population will inevitably continue to decline over the next 20 years,” he said during a meeting with Jung Chung-rae, head of the Democratic Party of Korea.
“We need policies that can alleviate old-age poverty through extending the retirement age and give young people hope by creating more quality jobs.” — The Korea Herald/ANN
