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[Opinion] Extend the Retirement Age

Posted May. 10, 2006 02:59,   


Surely, low birth rates are a cause of concern, but they are a disaster for the future. The bigger problem is how to provide welfare and support to elderly citizens who have no jobs and earn no income. With birth rates lowering and the population aging at a rapid pace, if there is no improvement in the employment structure which allows no room for middle-aged and elderly workers, the nation as a whole will be faced with more serious trouble.

If this is the case, it is worth trying reverse thinking. In thinking reverse, the solution lies in giving middle-aged and elderly citizens jobs, thereby reducing welfare burdens and easing the deterioration of economic vitality, which is the result of low birth rates.

Recently, Germany decided to extend the retirement age by two years to 67. Great Britain also made a decision to prolong the retirement age by three years from the current 65 to 68. Finland provides elderly workers who work until they are 68 years old a “bonus pension.” The new Italian administration, which was inaugurated last month, succeeded in a change of regime by pledging to extend the current retirement age of 57 by three years. Korea also seems to have to learn from the wisdom of European countries, which are making full use of their elderly citizens.

The United States will raise the retirement age at private companies from the current 65 to 67 over the next 20 years, in response to the skyrocketing demand for pension benefits as the baby boom generation ages. Japan raised the retirement age from the current 60 to 62 by revising the “Employment Security Law,” and plans to extend it again to 65 through 2013. The Japanese government moved beyond that and decided to urge companies “to hire until age 70.” The ultimate goal of the Japanese government is to abolish the retirement system itself and create a society where anyone can work as long as he or she wants.

Japanese companies are already boosting their profitability by re-employing retirees who are aged 60 or over as “skilled partners.” Toyota Motor Corporation is a prime example of this trend. There, although older workers are paid just 60 to 70 percent of what full-time workers get, their experience and skillfulness are translated into the quality of products. Meanwhile, companies such as Mitsubishi Heavy Industries, Nippon Steel Corporation, and Yokohama Rubber are extending the retirement age. They buy cheap and sell expensively “the experience and wisdom of old age.” If this fills in “the passion and ambition of young people,” whose proportion in demographics is shrinking with birth rates lowering, then companies will be able to strengthen their competitiveness. Therefore, hiring the elderly is a two-bird-one-stone solution. It is something that we in Korea, where “retirement in one’s 50s” has taken a deep root, should take note of.

Kim Chung-sik, Editorial Writer, skim@donga.com