The Democratic Party of Korea restarted legislation to extend the retirement age as soon as the June 3 local elections ended. According to the party's Special Committee on Retirement Age Extension, the Democratic Party has settled on a plan to gradually raise both the statutory retirement age, currently 60, and the age subject to mandatory re-employment, to 65 by 2037. The plan is to raise it to 61 in 2029 and then by one year every two years thereafter. The Democratic Party plans to gather opinions from various sectors, present a final proposal at the end of this month, and begin legislation in earnest.
Extending the economic activity of the elderly is an unavoidable task, considering the entry into a super-aged society and the declining trend of the working-age population. As labor shortages at industrial sites become severe, the importance of skilled middle-aged and older workers is growing. However, if realistic supplementary measures such as labor market flexibility are not put in place, confusion at industrial sites could intensify. Even abroad, it is difficult to find a country that simply extended the statutory retirement age. Germany established a phased retirement model by combining reduced working hours with partial pensions, while Japan implemented re-employment, job transitions, and wage adjustments as a package.
Our labor market is bound by a rigid employment structure and a seniority-based pay-scale system. If the retirement age is extended while leaving the outdated wage system unchanged, companies cannot avoid an increase in labor cost burdens. This ultimately leads to reduced new hiring and worsens the youth employment crisis. With limited quality jobs at stake, there are even concerns about generational conflict. Moreover, the benefits of extending the retirement age are likely to be monopolized by regular employees at large corporations and public institutions, as well as civil servants. The Democratic Party's special committee also plans to temporarily pursue working-hour adjustments and wage-system reforms in consideration of this, but companies' anxiety remains.
Extending the retirement age should be left to corporate discretion rather than imposed uniformly by the government or political circles. Companies should be allowed to choose employment types suited to their industry and management conditions. Above all, it must be handled together with reforming the wage system into a job- and performance-based pay system and improving the dual structure of the labor market. Only then can the shock to the employment market, such as the youth employment cliff caused by extending the retirement age, be minimized. In addition, various regulations that constrain companies should be overhauled to encourage an increase in quality jobs. Now is the time for a refined approach that allows the elderly and the young to coexist and prosper, rather than a rushed legislative push.
