Included as a National Policy Task...
Detailed Discussions to Begin in 2027
Key Challenges: Financial Burden and Overlapping Benefits with the National Pension
The government is considering a plan to provide unemployment benefits to newly employed individuals aged 65 and older, in line with its policy to gradually extend the legal retirement age to 65.
On August 24, Yonhap News reported that the government is pushing for legislation to gradually raise the retirement age from 60 to 65 by 2033, and that the expansion of unemployment benefits is being discussed in the same context.
Unemployment benefit applicants visiting the Western Employment Welfare Plus Center in Mapo-gu, Seoul.
According to the Ministry of Employment and Labor, the current Employment Insurance Act stipulates that individuals who are newly employed after the age of 65 are not eligible for unemployment benefits, even in cases of involuntary job loss.
However, those who continue working at the same workplace before turning 65 are an exception. As of 2023, South Korea's labor force participation rate among those aged 65 and older was 37.3%, nearly three times the OECD average of 13.6%, and the highest among the 38 member countries.
The government is reviewing policy improvements to reflect the current high economic participation rate among the elderly and the trend of extending the retirement age. The goal is to reduce gaps in the employment safety net, given the active employment of older adults.
The Presidential Committee on National Policy Planning has included the extension of the retirement age and the expansion of unemployment benefits in its national agenda. Concrete discussions are set to begin in 2027, with a decision on implementation expected in 2028.
However, the key issue is financial. The Ministry of Labor estimates that including newly employed individuals aged 65 and older would require an additional 300 billion won annually, totaling 1.2 trillion won over four years. Unemployment benefit expenditures have already nearly tripled, rising from 5.5 trillion won in 2015 to 15.1 trillion won in 2023.
As of July this year, 7.5 trillion won had already been paid out, with monthly payments exceeding 1 trillion won for six consecutive months. The Employment Insurance Fund's reserves increased from 7.0277 trillion won at the end of 2020 to 8.8832 trillion won at the end of last year, but have since decreased to 7.8553 trillion won as of June this year due to rising unemployment benefit payments. Additionally, since individuals aged 65 and older are eligible for the National Pension, adding unemployment benefits could result in dual benefits, which is another issue to address.
The Ministry of Labor stated, "We will discuss the system by comprehensively reviewing the purpose of extending the retirement age, the realities of elderly employment, the financial status of employment insurance, and the consistency with other social security systems."
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