Debate underway on extension of retirement
age
Supermarket chain Lotte Mart recently filled 400 irregular jobs with people aged 56-60.
Among more than 2,600 applicants for work as a cashier or online picker were hundreds of retired corporate executives, bankers and school principals. About 70 of them held a master’s degree or doctorate.
Although paid less than younger regular staff, most of the senior-aged employees felt satisfied with being placed on the payroll again.
“It’s a win-win for us and the retirees seeking a new job,” said an official at Lotte Mart, which plans to employ 600 more job-seekers in their 50s in the latter half of the year.
Another discount store chain Homeplus has hired more than 1,800 people aged 50-65 over the past four years, with a plan to recruit 400 more this year. It raised the retirement age for its 21,000 staff from 55 to 60 last year.
Such moves by the two retail chains, as their officials say, appear to be keeping pace with the trend that more people want to or are forced to work beyond formal retirement.
With the baby boomer generation born between 1955 and 1963, whose number amounts to 6.95 million, or 14.3 percent of the population, beginning to leave the workforce, calls are mounting for increasing their retirement age.
But social consensus still remains beyond reach as some express concerns that extending retirement age would lead to a further reduction in job opportunities for young people, whose jobless rate is hovering around 8 percent.
In a reflection of the sensitivity of the issue, a body set up to work out measures to retain baby boomers in the workforce failed to reach an agreement to raise the corporate retirement age to 60 after a year of discussion in March 2011.
A participant on the 16-member subpanel under the trilateral commission among the labor, management and government said the “debate became stalled as the possibility of intergenerational conflict over jobs was raised.”
Representatives from management argued that social environment and institutional infrastructure should be forged first, with government policymakers backing them by calling for a “cautious” approach.
Labor representatives insisted on pegging the retirement age at 60, noting that Korea has the lowest retirement age among the 34 member states of the Organization for Economic Cooperation and Development.
According to figures from the Ministry of Employment and Labor, the average retirement age at workplaces with more than 300 employees has remained little changed at around 57 over the past decade. Public servants are set to retire at 60.
The trilateral commission launched another subpanel on “co-existence between generations” earlier this month. Planned to operate for one year, it is tasked with drawing up methods to increase jobs in a way not to be a zero sum game between the young and old.
Conflicting views
Debate has been under way among experts over the correlation between extended working age for the older generation and reduction in job opportunities for the younger generation.
Many labor experts have argued that extending the retirement age has little impact on youth employment, saying concerns over intergenerational competition or conflict over jobs are exaggerated in most cases.
“On the level of an individual company, they may appear to be substituted for each other,” said Phang Ha-nam, a senior researcher at the Korea Labor Institute, a non-profit research organization in Seoul.
“From the viewpoint of the whole economy, however, they are not seen as conflicting with each other,” he said.
But a report released by the Samsung Economic Research Institute last year suggested job opportunities for young people have been at least partly substituted by the elder generation’s extended career over the years from 2005.
A 1 percentage point increase in the employment rate of people in their 50s translated into a 0.5 percentage point decrease in that of 20-somethings between 2005 and 2010, according to the report.
Particularly over the period of 2007-09 when the global financial crisis brewed and peaked, the rate declined by 0.84 percent for the young while rising by 1 percent for the old.
“It would be desirable for jobs to increase at the same time for both the older and younger generations, but in reality that is not the case,” said Tae Won-you, a SERI research fellow.
“The substitutive relationship becomes conspicuous particularly in decent jobs at large businesses, banks and public corporations,” he said.
Tae noted that corporate efforts to avoid massive layoffs through job sharing and other labor-management concessions in the economic recession led to further reducing the room for hiring young people entering the labor market.
Figures from Statistics Korea showed the employment rate of 50-somenthings rose from 68.1 percent in 2005 to 71.6 percent in 2011, while that of 20-somethings fell from 61.2 percent to 58.5 percent over the cited period. The rate for the economically active population aged 15-64 stood at 59.1 percent last year, up 0.4 percentage point from the previous year.
The number of employed people climbed by about 415,000 from a year earlier in 2011 and around 70 percent of the new employees were in their 50s.
Cautious approach
Some experts say that the youth unemployment problem is expected to be alleviated from 2015 when retirees begin outnumbering college graduates.
The Employment and Labor Ministry estimates the number of college graduates will reach about 502,000 in that year, compared to some 541,000 workers assumed to retire at age 57.
According to the SERI report, however, intergenerational tension over jobs is expected to linger until 2018 when the last batch of baby boomers come up to retirement age.
Government officials suggest they will not hurry in extending the retirement age, reflecting their more sense of urgency with which they handle the high youth unemployment. Including those who have given up looking for jobs, one in five youths is actually left jobless, experts note.
While admitting the country’s retirement age is too early, Employment and Labor Minister Lee Chae-pil recently said his ministry will not impose “artificial guidance” on corporations to raise retirement age for their employees.
Strategy and Finance Minister Bahk Jae-wan has proposed placing the focus of policy on hiring young job-seekers by 2014 and then considering increasing retirement age.
Some labor policymakers suggest the government may move to obligate companies to extend retirement age to 60 in 2017.
In what appears to be a bid to woo senior voters in the run-up to the April parliamentary elections and the December presidential poll, political parties have pledged efforts to raise the retirement age beyond 60 to fill the gap with the age eligible to receive state pension payments.
Some companies have already increased retirement age to avoid the shortage of skillful workforce that may be caused by the massive retirement of baby boomer workers.
Hyundai Heavy Industries, the world’s largest shipbuilder, has allowed those coming up to retirement age to work for one more year if they agree to do so.
POSCO, one of the world’s leading steelmakers, increased its retirement age from 56 to 58 last year.
GS Caltex, a major oil refiner, is working on extending its retirement age by two years to 60 from this year, company officials say.
Wage peak system
Experts indicate that the need to prolong the working period becomes increasingly urgent with most baby boomer workers having insufficient money to stop working at the formal retirement age and their life expectancy rising. The proportion of people aged 65 or older, which expanded from 7.2 percent in 2000 to 11 percent in 2010, is projected to climb to 13.9 percent in 2015 and 15.5 percent in 2020, according to Statistics Korea.
Retaining senior and aged people in the workforce will also help ease the pressure on the pension system, which some researchers worry will be exhausted by the mid-2050s if left unaddressed.
A recent report by the Bank of Korea estimated the increase of retirement age by four years would lead to an average rise of 0.051 percent in annual economic growth over the period from 2011 to 2050.
Many experts note the restructuring of the wage system is required to ensure higher retirement age will not lead to a reduction in new employment. As one of the most efficient methods, they suggest the scheme under which the wage for an employee peaks at a certain age before declining in the years to retirement.
“The extent to which the wage restructuring is made will hold the key to whether a higher retirement age and more youth employment can go together,” said Phang, the KLI researcher.
Data from the Employment and Labor Ministry show the proportion of companies with more than 100 workers that have implemented the system increased nearly three-fold over the past five years to 12.1 percent in 2010.
Workers are also increasingly receptive of the wage peak system.
According to a survey by the Korea Chamber of Commerce and Industry last month, about 60 percent of employees polled were in favor of the system, with 80 percent of them ready to accept a maximum 20 percent cut in wage.
By Kim Kyung-ho
(khkim@heraldm.com)
Supermarket chain Lotte Mart recently filled 400 irregular jobs with people aged 56-60.
Among more than 2,600 applicants for work as a cashier or online picker were hundreds of retired corporate executives, bankers and school principals. About 70 of them held a master’s degree or doctorate.
Although paid less than younger regular staff, most of the senior-aged employees felt satisfied with being placed on the payroll again.
“It’s a win-win for us and the retirees seeking a new job,” said an official at Lotte Mart, which plans to employ 600 more job-seekers in their 50s in the latter half of the year.
Another discount store chain Homeplus has hired more than 1,800 people aged 50-65 over the past four years, with a plan to recruit 400 more this year. It raised the retirement age for its 21,000 staff from 55 to 60 last year.
Such moves by the two retail chains, as their officials say, appear to be keeping pace with the trend that more people want to or are forced to work beyond formal retirement.
With the baby boomer generation born between 1955 and 1963, whose number amounts to 6.95 million, or 14.3 percent of the population, beginning to leave the workforce, calls are mounting for increasing their retirement age.
But social consensus still remains beyond reach as some express concerns that extending retirement age would lead to a further reduction in job opportunities for young people, whose jobless rate is hovering around 8 percent.
In a reflection of the sensitivity of the issue, a body set up to work out measures to retain baby boomers in the workforce failed to reach an agreement to raise the corporate retirement age to 60 after a year of discussion in March 2011.
A participant on the 16-member subpanel under the trilateral commission among the labor, management and government said the “debate became stalled as the possibility of intergenerational conflict over jobs was raised.”
Representatives from management argued that social environment and institutional infrastructure should be forged first, with government policymakers backing them by calling for a “cautious” approach.
Labor representatives insisted on pegging the retirement age at 60, noting that Korea has the lowest retirement age among the 34 member states of the Organization for Economic Cooperation and Development.
According to figures from the Ministry of Employment and Labor, the average retirement age at workplaces with more than 300 employees has remained little changed at around 57 over the past decade. Public servants are set to retire at 60.
The trilateral commission launched another subpanel on “co-existence between generations” earlier this month. Planned to operate for one year, it is tasked with drawing up methods to increase jobs in a way not to be a zero sum game between the young and old.
Conflicting views
Debate has been under way among experts over the correlation between extended working age for the older generation and reduction in job opportunities for the younger generation.
Many labor experts have argued that extending the retirement age has little impact on youth employment, saying concerns over intergenerational competition or conflict over jobs are exaggerated in most cases.
“On the level of an individual company, they may appear to be substituted for each other,” said Phang Ha-nam, a senior researcher at the Korea Labor Institute, a non-profit research organization in Seoul.
“From the viewpoint of the whole economy, however, they are not seen as conflicting with each other,” he said.
But a report released by the Samsung Economic Research Institute last year suggested job opportunities for young people have been at least partly substituted by the elder generation’s extended career over the years from 2005.
A 1 percentage point increase in the employment rate of people in their 50s translated into a 0.5 percentage point decrease in that of 20-somethings between 2005 and 2010, according to the report.
Particularly over the period of 2007-09 when the global financial crisis brewed and peaked, the rate declined by 0.84 percent for the young while rising by 1 percent for the old.
“It would be desirable for jobs to increase at the same time for both the older and younger generations, but in reality that is not the case,” said Tae Won-you, a SERI research fellow.
“The substitutive relationship becomes conspicuous particularly in decent jobs at large businesses, banks and public corporations,” he said.
Tae noted that corporate efforts to avoid massive layoffs through job sharing and other labor-management concessions in the economic recession led to further reducing the room for hiring young people entering the labor market.
Figures from Statistics Korea showed the employment rate of 50-somenthings rose from 68.1 percent in 2005 to 71.6 percent in 2011, while that of 20-somethings fell from 61.2 percent to 58.5 percent over the cited period. The rate for the economically active population aged 15-64 stood at 59.1 percent last year, up 0.4 percentage point from the previous year.
The number of employed people climbed by about 415,000 from a year earlier in 2011 and around 70 percent of the new employees were in their 50s.
Cautious approach
Some experts say that the youth unemployment problem is expected to be alleviated from 2015 when retirees begin outnumbering college graduates.
The Employment and Labor Ministry estimates the number of college graduates will reach about 502,000 in that year, compared to some 541,000 workers assumed to retire at age 57.
According to the SERI report, however, intergenerational tension over jobs is expected to linger until 2018 when the last batch of baby boomers come up to retirement age.
Government officials suggest they will not hurry in extending the retirement age, reflecting their more sense of urgency with which they handle the high youth unemployment. Including those who have given up looking for jobs, one in five youths is actually left jobless, experts note.
While admitting the country’s retirement age is too early, Employment and Labor Minister Lee Chae-pil recently said his ministry will not impose “artificial guidance” on corporations to raise retirement age for their employees.
Strategy and Finance Minister Bahk Jae-wan has proposed placing the focus of policy on hiring young job-seekers by 2014 and then considering increasing retirement age.
Some labor policymakers suggest the government may move to obligate companies to extend retirement age to 60 in 2017.
In what appears to be a bid to woo senior voters in the run-up to the April parliamentary elections and the December presidential poll, political parties have pledged efforts to raise the retirement age beyond 60 to fill the gap with the age eligible to receive state pension payments.
Some companies have already increased retirement age to avoid the shortage of skillful workforce that may be caused by the massive retirement of baby boomer workers.
Hyundai Heavy Industries, the world’s largest shipbuilder, has allowed those coming up to retirement age to work for one more year if they agree to do so.
POSCO, one of the world’s leading steelmakers, increased its retirement age from 56 to 58 last year.
GS Caltex, a major oil refiner, is working on extending its retirement age by two years to 60 from this year, company officials say.
Wage peak system
Experts indicate that the need to prolong the working period becomes increasingly urgent with most baby boomer workers having insufficient money to stop working at the formal retirement age and their life expectancy rising. The proportion of people aged 65 or older, which expanded from 7.2 percent in 2000 to 11 percent in 2010, is projected to climb to 13.9 percent in 2015 and 15.5 percent in 2020, according to Statistics Korea.
Retaining senior and aged people in the workforce will also help ease the pressure on the pension system, which some researchers worry will be exhausted by the mid-2050s if left unaddressed.
A recent report by the Bank of Korea estimated the increase of retirement age by four years would lead to an average rise of 0.051 percent in annual economic growth over the period from 2011 to 2050.
Many experts note the restructuring of the wage system is required to ensure higher retirement age will not lead to a reduction in new employment. As one of the most efficient methods, they suggest the scheme under which the wage for an employee peaks at a certain age before declining in the years to retirement.
“The extent to which the wage restructuring is made will hold the key to whether a higher retirement age and more youth employment can go together,” said Phang, the KLI researcher.
Data from the Employment and Labor Ministry show the proportion of companies with more than 100 workers that have implemented the system increased nearly three-fold over the past five years to 12.1 percent in 2010.
Workers are also increasingly receptive of the wage peak system.
According to a survey by the Korea Chamber of Commerce and Industry last month, about 60 percent of employees polled were in favor of the system, with 80 percent of them ready to accept a maximum 20 percent cut in wage.
By Kim Kyung-ho
(khkim@heraldm.com)
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