ED Putting off retirement age

Working-age extension should accompany wage system reform

The idea of extending the retirement age has come under the spotlight again. On Monday, the presidential transition committee raised the need to put off retirement to cope with demographic changes resulting from rapid population aging and an extremely low birthrate.

Korea's total fertility rate ― the average number of children a woman bears in her lifetime ― stood at 0.81 last year, the lowest in the world. The committee estimated that in 2035, the core working population ― those aged between 25 and 29 ― would be 4.63 million less than now. Against this backdrop, the team proposed that Korea should prepare a policy to defer the retirement age by even one year.?

The team stopped short of suggesting how long the retirement age should be increased but said that the nation could consider increasing it to 65. That was the direction taken by developed countries where the population aging and low fertility phenomenon had become prevalent before Korea. Japan passed a law last year to lift the retirement age of government employees from 60 to 65. Germany is pushing to increase the retirement age from 65 to 67 by 2029.

However, extending the retirement age is a hot potato issue. It is highly likely to cause generational conflicts by adding to the burdens on businesses already saddled with jobless growth. Moreover, as the retirement of the elderly gets delayed, companies burdened with heavy labor costs become reluctant to hire young employees. Labor unions at some large enterprises recently prioritized the increase of the retirement age in collective bargaining, but employees in their 20s and 30s reportedly opposed it, showing how serious the problem has become.

Policymakers should promote it step by step and go through public debates instead of extending the legal retirement age by force. Above all, a uniform retirement age extension should not clash with another critical task of creating jobs for youth. The retirement age extension should be implemented gradually while applying the peak wage system for elderly workers. No less important is to lessen corporate burdens by reforming the rigid, seniority-oriented personnel management and payment system.?