[Retirement Age Extension, Time to Choose] Retirement Age Extended for Workers with Multiple Children... Implementation Timing Varies by Workplace Size

Democratic Party Considers Raising Retirement Age from 60 to 65
Task Force Launched for Social Discussions on Retirement Age Extension
People Power Party Pushes for Flexible Retirement Age and Continued Employment System
Wage System Reform to Focus on Job Function and Performance

The Democratic Party is currently proposing an amendment to the "Act on Prohibition of Age Discrimination in Employment and Promotion of Employment for Older Persons" (the Elderly Employment Act) to extend the current statutory retirement age from 60 to 65. Representative Park Hongbae has advocated for a phased increase in the retirement age through the revision of the relevant law. The main points of the amendment are to raise the retirement age from 60 to 63 from the date of implementation until 2027, to 64 from 2028 to 2032, and to 65 from 2032 onward. Representative Kang Hoonshik and others have suggested allowing retirement age extension only for workers with multiple children. Kang explained, "By extending the retirement age for workers with two or more children, we can contribute to creating a more stable environment for child-rearing."

Representative Park Jeong has introduced an amendment that applies different timelines for retirement age extension depending on the size of the workplace. Specifically, the retirement age would be set at 65, with workplaces employing 300 or more regular employees to implement the change five years after the law takes effect, those with 50 to 299 employees after two years, and those with 5 to 49 employees after one year. Park argued, "It is necessary to introduce the retirement age extension sequentially, starting with small businesses, in order to address concerns and side effects."

At the end of last month, the Democratic Party launched a "Retirement Age Extension Task Force (TF)" and began work to facilitate social discussions. The TF plans to refine the relevant legislation through discussions with labor and management until September, and to complete the legislative process by November. The underlying aim is to expand employment sustainability for older adults through retirement age extension and to achieve the goal of maintaining national productivity. With major labor organizations such as the Korean Confederation of Trade Unions declaring their full support, the party has also secured political momentum.

However, there are numerous challenges to resolve in the process of institutionalization. The core of the Democratic Party's retirement age extension policy is to increase the retirement age for older adults without affecting youth employment opportunities in any way. The party aims to solve the issue as a "win-win," rather than a zero-sum game. Given the strong interrelation between these groups, resolving their dynamics will be key.

Businesses have expressed concerns that the Democratic Party's retirement age extension policy is directly linked to increased labor costs, decreased productivity, and personnel bottlenecks. Some companies are demanding that the government support the costs of retraining and redeploying older workers if retirement age extension becomes mandatory. A member of the Democratic Party's retirement age extension TF stated, "We are working to find common ground through discussions involving not only workers, management, and the government, but also the younger generation and parents."

The Democratic Party also sees the "4.5-day workweek" and the long-term transition to a "four-day workweek," proposed by its presidential candidate, as potential solutions to the retirement age extension issue. The idea is to reduce working hours to provide more opportunities for young people while enabling older adults to participate more flexibly in the labor market. The candidate explained, "By 2030, we will reduce working hours to below the OECD average."

The party has also indicated its intention to discuss a fundamental review of the comprehensive wage system, the introduction of a daily working hour cap, and minimum rest periods. In addition to the retirement age extension issue, the party plans to put comprehensive labor reforms aimed at strengthening workers' rights on the table. The goal is not merely to revise a single provision, but to restructure the entire labor market.

The People Power Party is also grappling with the issue of extending the retirement age. This is due to the rapid decline in the working-age population in the industrial sector caused by low birth rates and an aging population, as well as the emerging gap between the retirement age (60) and the pension eligibility age (65). However, unlike the Democratic Party, the People Power Party believes that flexibility in retirement age, rather than legal amendments, is necessary. The party advocates for selectively extending the retirement age based on labor-management agreements.

The People Power Party has also pledged a continued employment system, in which workers who reach retirement age can continue to be employed or re-employed without changing the retirement age. The proposal is to create a structure where, if continued employment is desired, wages are based on job function or performance. In March, Representative Kim Wisang of the People Power Party introduced a bill to amend the Elderly Employment Act, which would require companies to provide continued employment but allow them to choose between extending the retirement age or rehiring after retirement.

This approach takes into account the labor cost burden on businesses. If only labor costs increase due to retirement age extension, a decrease in youth employment is inevitable. In the case of re-employment after retirement, new employment contracts can be based on job function or performance rather than years of service. From the company's perspective, this allows them to secure skilled workers while minimizing labor costs. A member of the People Power Party's Policy Committee emphasized, "We need to find a balanced approach that gives people who reach retirement age the opportunity to work without reducing youth employment, and companies also need the flexibility to make choices according to their circumstances."

The People Power Party also believes that wage system reform must accompany retirement age extension. The key is to shift from a seniority-based compensation system to one based on performance or job function. This is to increase companies' capacity to absorb the changes and minimize side effects caused by retirement age extension. Yoon Heesook, head of the Yeouido Institute and a member of the party's presidential campaign policy team, stated, "For older workers, labor costs are higher, so companies are just waiting for them to retire. We need to reform the wage system so that companies are not afraid of the retirement age system." Yoon argues that linking wage system reform with retirement age extension is essential to minimizing labor market polarization. There are concerns that if the retirement age is extended while the seniority-based pay system remains in place, the concentration of regular jobs in large corporations and public enterprises will intensify.

Since wage system reform itself is not easy, Yoon also pointed out that the current Labor Standards Act, which does not allow changes without union consent, must be revised. Yoon said, "If the total wage paid to workers does not decrease and only the wage structure is changed, we need a flexible approach that does not require union consent."