Debate heats up over extending retirement age to 65

Members of the Korean Confederation of Trade Unions hold a rally in Seoul, Saturday, calling for improved labor rights and the swift passage of a bill to raise the retirement age to 65. Yonhap

Debate is heating up over raising Korea's statutory retirement age, as the ruling Democratic Party of Korea (DPK) moves to increase it from 60 to 65, citing the nation’s transition toward a super-aged society.

Critics warn the move could reduce job opportunities for younger workers and place additional burdens on companies already facing high labor costs.

The DPK stated that its special committee on raising the retirement age has been in discussions with leading labor and business organizations — including the Korean Confederation of Trade Unions (KCTU), the Federation of Korean Trade Unions (FKTU) and the Korea Enterprises Federation (KEF) — to coordinate their positions on the proposed legislation.

The ruling party has pledged to pass the bill by year’s end, with gradual increases starting in 2027 bringing the age up to 65 by 2033.

Raising the retirement age was a key campaign pledge of President Lee Jae Myung and remains a major national priority. If enacted, it would mark the first extension since the nation raised the mandatory retirement age from 58 to 60 in 2016.

"Respecting the value of labor is the ultimate goal of the Lee Jae Myung government and our party. We will cooperate to achieve this goal and continue to pool our wisdom," DPK Chairman Rep. Jung Chung-rae said during a recent policy meeting at KCTU headquarters.

Labor groups have urged swift passage of the legislation, arguing that raising the retirement age is essential as Korea transitions into a super-aged society. They warned that keeping the current retirement age could leave a gap for the Korean baby boomer generation — those born between 1964 and 1974 — before they become eligible for national pension benefits.

The two major trade union federations held a rally in Seoul, Saturday, pressing for labor rights and the swift passage of the bill on retirement age extension. They said failure to raise the retirement age could worsen elderly poverty and drive up welfare spending.

Job seekers attend a job fair in Daegu, Wednesday. Yonhap

The business community, however, has urged caution. The KEF, a leading business lobby, called in its recent recommendations to the National Assembly for careful consideration of the proposal, warning of potential impacts on labor costs and the broader job market.

The KEF recently proposed enacting a separate law to promote the reemployment of older workers, rather than relying solely on raising the statutory retirement age. It also recommended that initial efforts to extend employment be followed by selective extensions based on company size and type.

According to government data, the number of regular employees — those expected to remain in their jobs for at least a year — drops sharply at age 60 under current labor law.

Among workers born in 1964, the number of regular employees dropped by roughly 55,000 between ages 59 and 60. The decline was even sharper in large corporations, where nearly half of employees in that age group left their positions.

These figures suggest that extending the retirement age by one year could keep as many as 50,000 older workers employed, potentially tightening an already challenging job market for younger Koreans.

However, this proposed solution comes with significant economic risks, especially for the nation's younger job seekers.

A Bank of Korea (BOK) report published in April found that for every older worker who remains employed, between 0.4 and 1.5 jobs for youth disappear. The report added that this effect could worsen as the prolonged economic slowdown already erodes companies' capacity to hire new employees.

"Considering the experience of the 2016 retirement age extension and cases in Japan, promoting continued employment of older workers would be more effective through post-retirement reemployment rather than simply extending the statutory retirement age," the report said.