Shaky Korea Faces 9.54 Million Retirees... No Pension Yet, Workforce Drains Out [Retirement Age Extension, Time to Choose]

From 1964 to 1974, the Second Baby Boomer Generation
Accounts for 33% of All Employed;
If They Retire by 2034, Growth Rate Will Drop by 0.38%p
Five-Year Income Gap Until Pension Begins at Age 65
Average Life Expectancy Is 83... 662 Million Won Needed
Skilled Labor Shortage Eased for Companies
Labor Wants "Retirement Age Extension,"
Management Prefers "Reemployment After Retirement"

The issue of retirement age and reemployment for workers aged 60 and over has become a top concern in both economic and political circles, due to the reality that over the next decade, 9.54 million people will reach retirement age. Given that the domestic population exceeds 50 million, this group accounts for one in every five citizens.

Over the next decade, 9.54 million people will reach the retirement age. Citizens are hurrying to work at the Gwanghwamun intersection in Jongno-gu, Seoul. Photo by Yongjun Cho jun21@

With the working-age population shrinking due to low birth rates and an aging society, a mass retirement of the baby boomer generation could result in a labor shortage, especially in skilled positions. In particular, individuals who retire face financial insecurity in old age due to reduced income, and society must bear significant costs to support retirees. If the economically active population declines and growth rates fall, this could escalate into a national crisis. This is why Korean society, which has entered a super-aged era, urgently needs to discuss whether to extend employment for older workers.

◆Critical income gap between retirement and pension eligibility=Over the past decade, the number of workers aged 60 and above has increased significantly. According to an analysis by Asia Economy of microdata from Statistics Korea's Economically Active Population Survey, the number of regular employees aged 60 and over with employment contracts of at least one year (excluding agricultural workers, based on monthly averages) rose from 533,000 in 2014 to 1,892,000 in 2024?more than a threefold increase.

Temporary and daily workers with contracts of less than one year also nearly doubled during the same period, from 1,071,000 to 1,919,000. While this reflects the broader trend of aging, the increase in regular employees also indicates a strong demand for labor.

An analysis by the Bank of Korea also shows that leaving the workforce after age 60 has a significant impact on the economy. The "second baby boomer generation," which includes those born in 1964 who have already reached retirement age through those born in 1974 who will retire in the next decade, accounts for about 33% of all employed people. If all these individuals exit the labor market by 2034, the annual economic growth rate is expected to decline by 0.38 percentage points.

It is estimated that there are as many as 1.4 million regular workers who have retired or are about to retire within the next five years. According to the latest data from the 2023 Economically Active Population Survey by Statistics Korea, 248,393 people born in 1965 and 266,077 people born in 1966 have retired, and 927,518 people born between 1967 and 1969 are also on the verge of retirement.

The employment issue for those aged 60 and over is directly linked to income gaps. Since the age at which people can begin receiving the national pension is 65, there is inevitably a five-year "lean period." The income gap after retirement can be devastating for both individuals and society.

According to Statistics Korea, the minimum monthly living expenses for a couple after retirement are 2.4 million won, while the appropriate amount is 3.36 million won. The average life expectancy for Koreans in 2023 is 83.5 years. Assuming a couple lives to the average life expectancy after retirement, they would need at least 662.4 million won to cover more than 23 years of living expenses. Even if part of this is covered by public pensions such as the national pension, there is growing consensus that the income gap resulting from mandatory retirement must be reduced.

There are also calls to delay the retirement age in line with the recent trend of raising the age definition of "elderly." In 2019, the Supreme Court changed its precedent for the first time in 30 years, recognizing 65 as the retirement age for physical labor, instead of 60, in consideration of increased life expectancy and retirement age. The Korea Development Institute (KDI) has suggested raising the age standard for seniors by one year every decade starting in 2025.

From the perspective of companies, there is a desire to continue employing older workers to preserve skilled labor and facilitate the transfer of skills to the next generation. This is also expected to help alleviate labor supply and demand imbalances caused by rapid aging and a shrinking workforce. Industries that especially require continued employment include manufacturing (which needs skilled workers), as well as healthcare and research sectors in regional areas, and the transportation industry, which is largely comprised of older workers.

◆Labor and management agree on the need, but differ on the method=While both labor and management acknowledge the necessity of continued employment for older workers, they are sharply divided on how to achieve it. Labor groups argue that the statutory retirement age should be raised to match the age at which the national pension begins. They believe that legal enforcement is necessary to reduce unnecessary conflicts in the workplace.

On the other hand, business groups are concerned that uniformly extending the retirement age would primarily benefit large corporations and public institutions, deepen the dual structure of the labor market, worsen youth employment, and fuel intergenerational conflicts over jobs. Instead of extending the retirement age, they argue that continued employment can be achieved through reemployment after retirement. According to a survey by the Korea Employers Federation (KEF), 67.9% of domestic companies prefer the "reemployment" method.

Lim Youngtae, head of employment and social policy at KEF, said, "Considering the increasing proportion of older workers within companies, it is desirable to introduce a selective reemployment system that guarantees companies the right to select reemployment candidates," adding, "Government policy support should be strengthened to help older workers who are not reemployed find new jobs."

The Economic, Social and Labor Council, a presidential advisory body, recently proposed allowing labor and management to voluntarily extend the retirement age, and applying a mandatory continued employment system to workplaces that cannot do so. The mandatory continued employment system would apply to all workers aged 60 and over who wish to continue working. Workers would be guaranteed appropriate wages corresponding to their productivity and could choose their working hours and duties. However, both labor and management oppose the mandatory continued employment system, making its implementation unlikely.

The KEF criticized, "While the mandatory continued employment system imposes obligations, it fails to address the core issue of wage system reform. If the seniority-based wage system, where those who have worked longer receive higher pay, is maintained, it will be difficult to bear the enormous costs of employing older workers." The Federation of Korean Trade Unions countered, "The mandatory continued employment system brings various problems such as age discrimination, income gaps, and labor-management conflicts."

Ultimately, the issue has been passed on to the new government, which will be inaugurated in June. Lee Jaemyung, the presidential candidate of the Democratic Party, recently stated, "We will pursue retirement age extension through social consensus," while Kim Moonsu, the presidential candidate of the People Power Party, pledged to grant companies autonomy over retirement age systems. As a result, the issue of continued employment is expected to be revisited after the presidential election.