Korean businesses are concerned about a burden to companies if the country’s government extends the legal retirement age from 60 to 65. The retirement age was previously changed in 2017 from 58 to 60.
A Growing Need for Older Workers
At present, there is a growing need for older workers in Korea as the population is falling amid an extremely low birthrate. Korea also has the highest rate of elder poverty in the developed world — with more than 40% of Korean’s over 65 considered poor, according to statistics from the Organization for Economic Cooperation and Development (OECD). People 65 or older are projected to account for almost half the country’s population by 2067, up from just under 15% today.
Korean Business Leaders Urging Caution
The business community is concerned that raising the retirement age would increase labor costs, labor-management conflict and increase joblessness among young people. The business community also believes the government should put in place social welfare policies and job retraining for older workers. As younger workers already possess digital economy skills, many older workers will require retraining to obtain such skills.
Korean Youth Unemployment is a Problem
Korean business sees the retirement age extension as something that may hamper youth unemployment and lead to a worsening generational conflict around employment opportunities in a changing economy. At present, youth unemployment in Korea is at 7.2% for those between 15 and 29, according to data compiled by Statistics Korea. For some experts, the increase in retirement age will reduce Korea’s economic competitiveness while increasing the gap between those older workers already in employment in large companies and younger workers trying to begin their careers.
Foreign Firms Should Plan in Advance for Korean Market Entry or Expansion
Recent and newly proposed changes to Korea’s retirement age reflect a fast-moving employment regulatory environment in Korea. If you’re entering the market, you may want to consider an alternative approach using an Asia-focused firm that can employ on your behalf to manage the risks of employment such as GoGlobal.