Businesses unhappy with gov’t retirement age extension

Businesses are expressing concern about the government’s possible move to extend the legal retirement age to 65 years from the current 60, according to industry officials, Thursday.

They said extending the retirement age could further increase the burden on companies already reeling from the sluggish economy and unfavorable business environment.

An official at one of Korea’s major business associations said although the retirement age extension could be a viable option to cope with the rapid demographic change, opinions are mixed among different economic players, and the government should seek a social consensus.

“Extending the legal retirement age could hamper youth employment at a time when the nation is struggling to create jobs, especially for young graduates,” the official said on condition of anonymity. “It could worsen the generational conflict.”

The unemployment rate for young adults — those aged between 15 and 29 — stood at 7.2 percent in August, according to data from Statistics Korea.

On Wednesday, the government announced it was considering introducing a new system that would require companies to employ workers for up to five years beyond the current retirement age of 60.

The move comes amid a growing need for older people to stay in the labor market longer, as the country’s working age population is expected to fall in the coming decades amid the fast aging population and extremely low birthrate.

Statistics Korea forecast that the country’s population is likely to decline to 39 million in 2067, down from an estimated 51.7 million this year.

It predicted that people aged 65 years or older would account for 46.5 percent of the nation’s population in 2067, up from 14.9 percent in 2019.

“The government should be cautious about bringing up this issue because it already revised the legal retirement age two years ago,” said an official at the Federation of Korean Industries (FKI).

The administration revised the Retirement Age Law in 2017 to increase the age to 60 from the previous 58.

“Extending the retirement age without reorganizing the wage system will only place more of a burden on companies in terms of increased labor costs,” said a Korea Chamber of Commerce and Industry official.

They also pointed out that union-management conflict and polarization of the workforce need to be resolved before discussing a roadmap for a retirement age extension.

An official from a major conglomerate pointed out that increasing the retirement age could take away jobs from the younger generation, who are able to cope better with the Fourth Industrial Revolution.