Korea's push to raise retirement age brings fears over youth job market

A retired worker stands on a street in Jongno District, Seoul, Dec. 3, 2024. Korea Times photo by Lee Han-ho

In Korea, a superaged society where those aged 65 or over take up more than 20 percent of the total population, a renewed debate has emerged over what age should be set for retirement.

The discussion resurfaced last month after the ruling Democratic Party of Korea (DPK) floated the idea of raising the retirement age from 60 to 65. The party, however, is taking a cautioned approach and avoiding railroading the policy plan since it is closely related to youth employment. The issue now is balancing longer careers for the elderly with the potential cost of fewer job opportunities for young workers.

Income cliff

The retirement age of 60 is usually observed in the public sector and most private companies, although some companies set their own ages under a labor-management agreement.

At the heart of the issue is the income cliff between the retirement age and the national pension eligibility age, which ranges from 60 for those born in 1952 or earlier to 65 for those born in 1969 or later.

For those at the higher end, that gap can mean five years without receiving national pension after retirement, leaving retirees exposed to the gap during a critical stretch of their lives.

President Lee Jae Myung made the commitment his campaign pledge last year, vowing to raise the retirement age to align with the national pension eligibility age.

"The gap between the legal retirement age and national pension payouts leaves people's livelihoods on a cliff edge," Lee wrote on social media in May 2025. "To respond to low birthrates and an aging population, we need to build a society where people can keep working."

The DPK has since launched a special committee on the issue last November and is reportedly pushing to gradually raise the retirement age from 60 to 61 in 2029, adding one year every two years until reaching 65 in 2037.

Yang Kyeong-su, third from left, president of the Korean Confederation of Trade Unions, and Kim Dong-myeong, fourth from left, president of the Federation of Korean Trade Unions, call for legislation to raise the legal retirement age from 60 to 65 at a press conference at the National Assembly, Seoul, June 16. Yonhap

Labor, business divided

The plan has drawn sharply different responses from labor and business.

“Our basic principle is that the retirement age should be legally raised to match the pension eligibility age,” said Woo Moon-sook, a policy department director at the Korean Confederation of Trade Unions, a powerful umbrella labor organization with more than 1 million members.

Woo added the government needs to resolve the problem as soon as possible, noting that many people in their 60s already face an income cliff.

A source from the business circle who requested anonymity, however, said such calls to raise the retirement age invite questions of who stands to benefit and where the side effects are expected to emerge.

“The benefits of an extended retirement age will ultimately go to older workers at large corporations, state-run companies and public institutions,” the source said.

He added that with a fixed total wage budget, fewer newcomers can be hired if existing employees stay on. Artificial intelligence is adding further pressure on entry-level jobs, a dynamic he warned raising the retirement age would only worsen.

“Small- and mid-sized companies are already short on workers and unlikely to see generational conflict, but at bigger employers, young and older workers will end up competing for positions.”

Wage reform is missing piece

Experts broadly acknowledge the need to raise the retirement age but say it must come with generational job development and wage reforms.

Park Ji-soon, a law professor at Korea University, warned that without changing how wages are structured, longer careers will come at a steep cost.

“Raising the retirement age without wage reform will drive up labor costs exponentially. We still have a seniority-based system where costs keep rising with tenure,” Park said.

He added that positions open up when older workers step down, letting younger hires move in. If those positions are held for five more years, opportunities for young people shrink accordingly, he said.

The professor suggested moving older workers into roles suited to their level, with new positions and matching wage systems developed for them.

Kim Sung-hee, a professor at Korea University's Graduate School of Labor Studies, however, argued that raising the retirement age does not directly lead to generational conflict, since skill levels, experience and job preferences differ across generations.

But Kim warned that the risk remains for sought-after positions in large corporations and the public sector.

“Public institutions are constrained by total headcount and wage budget systems, so increasing one side means cutting the other. That system needs to be reformed, without budget constraints,” Kim said.

Lee Dong-hee, vice president for management at the Korea Institute for Industrial Economics & Trade, emphasized the need to identify roles where generational preferences overlap less.

Lee cited chefs as an example, noting the role demands significant physical stamina. While it has grown more popular among young people in recent years, he said older workers tend to avoid it due to the physical demands of the job.

Public sentiment, meanwhile, was less about policy and more about life, but still showed generational difference.

Yoon Sung-nyeon, 53, an office worker, said the issue needs thorough discussion for the sake of young people's future.

“Senior citizens should be willing to put themselves in younger people's shoes and compromise at times,” Yoon said.

Moon Kyung-hoon, 34, an office worker, said he hadn't thought much about the issue, though working until 65 struck him as a reasonable idea.

“You could work a bit longer as you get older and be better prepared for retirement,” Moon said.