By Jhoo Dong-chan
The poverty rate of elderly citizens in Korea is far higher than in other major economies, while their net replacement rate is almost at the bottom, a study showed, Sunday.
The poverty rate is the ratio of households that make below 50 percent of the median household disposable income. The net replacement rate is the level of individual net pension entitlement divided by net pre-retirement earnings, according to the Organization for Economic Cooperation and Development (OECD).
The report by the Korea Labor Institute (KLI) revealed that the poverty rate among senior citizens in Korea aged 65 or older was 48.6 percent in 2011, indicating that almost one in two elderly households are living in poverty.
This is the highest among the 34 OECD nations and double the figure of Switzerland, which ranked second with 24 percent. Israel and Chile came third and fourth with 20.6 percent and 20.5 percent, respectively.
Poverty was more serious among single-person elderly households, with 74 percent of such households in poverty in 2013, the report said.
In line with the high poverty rate, the nation’s net replacement rate was 45.2 percent in 2012, falling behind the OCED average of 65.9 percent.
The International Labor Organization recommends a net replacement rate of 70 to 80 percent. Only five countries ― Mexico, Japan, Britain, New Zealand and Ireland ― recorded lower net replacement rates than Korea.
The nation’s high elderly poverty rate and low net replacement rate resulted from the rapid transformation of family structure and an underdeveloped welfare system, the report said.
“Elderly poverty will increase further as the baby-boomer generation begins retiring amid the nation’s low net replacement rate,” KLI researcher Kim bok-soon said.
“The nation should come up with a labor policy that can support the elderly population.”
In 2014, those aged 65 or older took up 15.1 percent of the nation’s labor market.