Extension of retirement age
By Kim Dong-soo
“Youth credit delinquents and forced voluntary retirement”- this reflects recent Korean society. According to the “Monthly Employment Analysis” in the National Statistical Office(NSO), the youth unemployment rate in February 2015 was 11.1%, which has jumped by 1.9 percentage points compared to January’s rate.
In the meantime, many surveys by the media show that the average retirement age is about 53, but the NSO reports the life expectancy to be 81.9 years old as of 2013. Let us examine these social issues in three ways.
First, it is necessary to figure out why youth unemployment is so high. Structural changes in industry are so slow that decent job creation for the young is limited.
Social perception of the so-called 3D(dirty, difficult, dangerous) job aversion, avoidance of economic independence due to generous financial parental support, etc. are possible reasons for high youth unemployment. Encouraging and stimulating the young generation through education, employment or training should currently be the most important policy concern.
It is ironic that the B2B online shopping mall Alibaba, was created in China, a communist country by a former English teacher, Mawin.
It is very important to ignite the young to challenge themselves with successful and reachable cases to pave their way toward a bright future.
Second, a few months ago, Samsung’s announcement of its extension of the retirement age from 55 to 60 years became an issue, not because it is dramatic but because it is not possible. In other words, employees at Samsung are hardly able to work up to the age of 60, realistically.
Early voluntary retirement is a huge social loss in the aspect of losing skilled and experienced labor.
In addition, the rate of poverty in the Korean elderly of over 65 years old reached the highest level in the OECD, of 45.6% in 2014.
Social problems driven by forced early voluntary retirement triggers serious elderly care and elderly poverty.
Extension of the retirement age for experienced skilled workers is crucial not only to induce knowledge spillover but also to reduce welfare costs for the elderly.
Lastly, it seems that Korea is really facing the aging trap. The population in their 40s is about 72% more than those under the age of 10 as of 2010.
After the Korean War, there was a baby boom in the 1960s and 1970s. However, people have since opted to defer having babies due to a fiercely competitive living environment post the Asian Financial Crisis in the late 1990s and the Global Economic Crisis in the late 2000s.
The pear-shaped population pyramid has triggered a lot of social conflicts, such as social welfare for the elderly and compulsory education between generations, which has not yet been considered much in terms of long-term population policy so far. Although it is overdue, it must not be evaded.
The writer is an economist at the Korea Institute for Industrial Economics & Trade (KIET).