Retirement Age Extension Approaches... Need to Resolve Dual Structure in Discussions [New Government Policy Issue]

Retirement Age Extension Gains Momentum Under New Administration
Full-Scale Discussions Expected After Appointment of Labor Secretary
Need to Resolve Dual Structure of Social Dialogue
Field Concerns Persist... "Companies Should Have the Choice"

As the new administration plans to extend the statutory retirement age from 60 to 65, there is growing attention on how to resolve the dual structure of social dialogue. With a high likelihood that a bill related to retirement age extension will be prepared within the year, concerns continue to be raised at the field level regarding the implementation of the system.

Provided by Ministry of Employment and Labor

On June 18, the Ministry of Employment and Labor announced that it would include discussions on retirement age extension in its policy briefing to the National Planning Committee scheduled for tomorrow. Although specific details have not been disclosed, there is speculation that a blueprint for retirement age extension could be discussed, as the National Planning Committee has requested updates on current issues and the implementation of key pledges during the briefing. President Lee Jaemyung previously pledged to gradually extend the statutory retirement age from 60 to 65 and to enact the legislation within the year.

Related discussions are expected to accelerate after the appointment of a labor secretary at the presidential office. However, resolving the dual structure of the dialogue process is considered a key challenge. This is because the discussion framework is currently split between two pillars: the Economic, Social and Labor Council, a presidential advisory body for social dialogue, and the "Task Force for Retirement Age Extension for Recovery and Growth," launched by the Democratic Party in April.

A Democratic Party official stated, "The retirement age extension task force was established to pursue a different approach from the previous administration, but with the change in government, both sides are now aligned." The official added, "Since there is no need for two bodies to discuss the same issue, we plan to consult on how to proceed once the labor secretary is appointed." An official from the Economic, Social and Labor Council also said, "As we are now in the legislative phase, the matter can be handled in the National Assembly, but since the Council is the official social dialogue body, it could also be addressed here," leaving open the possibility.

Previously, in June last year, the Economic, Social and Labor Council established the "Continued Employment Committee for Responding to Demographic Changes," a subcommittee by agenda, and has since been conducting tripartite discussions on continued employment, including retirement age extension. However, differences between labor and management have not been narrowed, and the Federation of Korean Trade Unions, which participated as a labor representative, has not engaged in dialogue since the December 12·3 martial law incident last year. As a result, last month, instead of a labor-management agreement, the Council presented a proposal from public interest members.

This proposal included a recommendation to gradually mandate continued employment (re-employment) as a transitional measure for retirement age extension, aligning it with the national pension eligibility age of 65 by 2033. Regarding this conclusion, labor representatives expressed concerns about wage reductions resulting from re-employment, while management objected to the omission of a shift to a job-based wage system. The new administration appears set to pursue retirement age extension but is expected to establish a pan-government support system to ensure gradual implementation.

Meanwhile, although the push for retirement age extension is gaining momentum under the new administration, concerns continue to be voiced at the field level. An industry representative pointed out, "Due to the diverse characteristics of companies and industries, there are places where retirement age extension is needed and others where it is not, at least for now. Applying it uniformly could negatively impact youth employment and further exacerbate the existing dual structure of the labor market, which is already considered problematic."

Lee Sooyoung, a special professor at Korea University's Institute of Aging Society, said, "If a company is in a very stable situation, retirement age extension may be possible, but it is not feasible in situations involving restructuring due to economic downturns. It is reasonable to establish a system that allows companies to choose among retirement age extension, abolition, or re-employment based on their circumstances." She also noted, "We should refer to the examples of Japan and Singapore, where, like Korea, wages are rigid and the re-employment system has been adopted."