Retiring Age to be Extended to 65 years

Entering upon the aging society, the government is accelerating on the change of law of “employment promotion for the aged,” which is planned to extend the working age limit from 60 years to 65 years.

According to the report “Current status of aging population and prospective measures,” released by the Ministry of Finance and Economy (MOFE) on November 9, the government is reviewing the new policy in a bid to ensure the manpower and save the expenses for supporting the elderly.

After discussing with the Ministry of Labor and involved administrations, MOFE will plan to make a concrete blueprint. Although the exact retiring age has not been fixed yet, considering the Japanese case whose Ministry of Welfare and Labor expressed that the age limit for working will be extended from 60 to 65 years, it is likely that Korea’s case will be similar, a MOFE official explained.

The reason why the government proceeds to lengthen the age limit in workplaces is based on the fact that the aging situation in Korea is rapidly progressing, which seems to threaten even the financial status of the nation. It now becomes urgent to decrease the expenses of the welfare for the elderly by extending the period of social activities of the aged.

According to the MOFE’s report, among the workers over 55 in Korea, 40.3 percent are engaged in agriculture, forestry and fishery business and thus, it is inevitable to extend the retiring age since there will be less jobs in such sectors of the overall economy due to opening market trends. The aged employees would also find fewer job opportunities.

In addition, MOFE announced that the aging population trends should be attenuated by encouraging the birth rate of 1.17 as of January 2002, which does not even reach to the normal rate (2.1) that is necessary for maintaining the actual population.

Park Joon-sung, a professor in business administration in Sung-shin Women’s University, said, “Given that the aging society is rapidly under way, the extended retiring age will be able to offer job opportunities for middle and old aged workers and support them to improve the quality of life.” He added that the new plan will also contribute to control the society’s high-cost structure problems if it combines well with the salary peak system.

Meanwhile, the Ministry of Labor decided to reinforce administrative instructions in order to implement the regulation of banning discrimination against the aged workers in case of recruitment and dismissal (The law of employment promotion of the elderly, Article 4, clause 2).

In addition, the ministry is planning to strengthen the incentives system for companies that newly hire the elderly, and will largely extend the size and recipients of “Subsidy support system for hiring the aged employees” starting in January 2004.

Jin-Hup Song Ji-Wan Cha jinhup@donga.com cha@donga.com