By Yoon Ja-young
The ratio of poor elderly people is the highest in Korea compared to other developed economies, a report by the Organization for Economic Cooperation and Development (OECD) shows.
Experts say that the labor market policy should change for senior workers as the country’s pension is not capable of providing them with enough income.
According to the report, “In It Together: Why Less Inequality Benefits All,” released by the OECD, income inequality has reached record highs in most OECD countries and is even higher in many emerging economies.
The richest 10 percent of the population in OECD countries earn 9.6 times the income of the poorest 10 percent, which compares with seven times recorded in the 1980s and nine times recorded in the 2000s.
Inequality was even more of a problem in Korea, with the richest 10 percent earning 10.1 times more than the poorest 10 percent. The figure is 19 times in the United States, while among European countries like Denmark, Belgium, Norway, Germany and the Netherlands it is five to six times higher.
“We have reached a tipping point. Inequality in OECD countries is at its highest level since records began,” OECD Secretary-General Angel Gurria said, launching the report.
“The evidence shows that high inequality is bad for growth. The case for policy action is as much economic as social. By not addressing inequality, governments are cutting into the social fabric of their countries and hurting long-term economic growth,” he said.
Senior citizens in Korea in particular are suffering from poverty. The poverty ratio is 49.6 percent for Korean senior citizens age 65 or older, the highest among OECD member countries and nearly four times higher than the OECD average of 12.6 percent. A person is considered poor if he or she earns less than 50 percent of the national median income. Korea’s poverty ratio for other age groups was lower than the OECD average, however.
The poverty ratio is high among senior citizens as many are marginalized because of the pension system. According to 2014 data from Statistics Korea, a majority of Korean senior citizens, or 82 percent of those aged between 55 and 79, got less than 250,000 won in monthly pension or no pension at all.
Such poverty has led to a high suicide rate. The suicide rate was 82 out of every 100,000 senior citizens in Korea, the highest among OECD member countries.
Kim Gwang-suk, a senior researcher at Hyundai Research Institute, said the problem will worsen coupled with the low birthrate and rapidly aging society. He added that expanding jobs for senior citizens could be an answer.
“As there is concern over the fiscal stability of the public pension, there should be other ways to prepare for life after retirement,” Kim said.
“Public labor projects should be expanded so that senior citizens who are capable of working can earn money, on top of providing bridge jobs for those wishing to re-enter the job market after retirement. For low-income senior citizens who aren’t capable of working, the government should expand public expenditure,” he said.