S. Korea to raise retirement age revision as official agenda next year

2021.04.15 15:00:22 | 2021.04.15 15:00:49

[Photo by Han Joo-hyung]이미지 확대

[Photo by Han Joo-hyung]

South Korea will next year invite social discussions to push back the legal retirement age to maximum 65 from 60 in line with fast aging, but the move sought by the president whose term ends in spring next year raises eyebrow for having more political design.

According to the Korean government on Wednesday, the third task force on population policy under the Ministry of Economy and Finance plans to announce later this year that it will socially raise the issue of extending retirement age from the current 60 to 65 from 2022.

Finance Minister Hong Nam-ki had also noted earlier this month that the government will announce core tasks in June following review of discussions at the Economic, Social & Labor Council that involves representatives from labor, management, civic groups, and government.

It is not the first time for the government to raise the idea of extending retirement age. In September 2019, Hong proposed to discuss whether to introduce continuous employment system and five months later President Moon Jae-in also said it is time to discuss employment extension. His remarks however raised strong backlash from young people concerned over job losses and companies over employment flexibility.

The decision to reignite the controversial matter comes as there are concerns over falling tax collection due to low birth rate and aging society. Once 8 million baby boomers in their 50s and 60s retire, the country would be left with sharp surge in welfare costs and fall in tax revenue. More people would be receiving pensions with fewer paying taxes on earned income.

An unnamed official from the task force urged the government to establish a stage-by-stage roadmap by officially bringing the agenda to the table.

According to Korea Economic Research Institute, the economically active people aged between 30 and 59 ar on a decline. Each of them would have to shoulder 3.74 million won in tax charge in 2050, up from 1.43 million won in 2020.

Some critics think the government is bringing back the issue to win voters ahead of the presidential elections next year. About 8.6 million voters are in their 50s, 2 million more than those voters in their 20s, and 8.1 million are in their 40s.

A government official who asked to be unnamed said that minimum wage was a big issue during the previous presidential elections but the upcoming elections will be dominated by discussions over employment extension.

By Yoon Ji-won and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]