Recently, South Korean unions are fighting with corporate management to demand an increase in the retirement age, to extend the working years and salary-earning period before workers retire.
This demand by the South Korean unions has intensified employment competition among older workers. South Korea is one of the countries with the fastest aging population globally, with data showing that the poverty rate among the elderly is three times the OECD average, while young people entering the labor market face fewer and fewer job options.
By 2025, more than one-fifth of the South Korean population will be over 65, turning South Korea into a "super-aged" society, and the call for raising the retirement age is growing louder. The Federation of Korean Trade Unions (FKTU) stated in a declaration that people over 60 have to take up low-quality jobs after retirement, perpetuating the problem of an unstable labor force.
However, opponents argue that the unions' demands will worsen the employment prospects for young people and hinder companies from adapting to the constantly changing economic environment. This month, the Economic, Social and Labor Council stated that merely raising the retirement age through legislation, as demanded by the labor sector, could be a significant barrier for young people seeking employment.
A union official stated on Tuesday that, after failing to reach an agreement on wage issues, the union of POSCO is planning to vote on whether to strike. One of their demands is to raise the retirement age from 60 by one year. Meanwhile, the Hyundai Motor union, which employs 44,000 workers, will also announce its potential strike plans on Wednesday, similarly demanding an increase in the retirement age for its employees.
Although South Korean law sets the retirement age at 60 and above, most companies limit it to 60. This year, South Korean unions launched a petition asking the parliament to gradually increase the statutory retirement age to 65.
According to Statistics Korea, people aged 65 and over account for 18.4% of the total population, up from 11.9% in 2013. This proportion is expected to exceed 20% by 2025 and 40% by 2050.
With the rapid increase in the elderly population in South Korea, the National Pension System's (NPS) support for the elderly is weakening. The institution forecasts that the wage replacement rate of NPS will decrease from 70% in 1998 to 40% by 2028, compared to about 60% to 70% in developed European economies. Although NPS is the world's third-largest pension fund, managing 974 trillion Korean Won (737 billion USD) as of May this year, the OECD predicts that NPS will run out of cash by 2055.
In addition to demanding an increase in retirement age, South Korean unions also wish for employees to retain their jobs for longer terms. Hyundai Motor hired 400 workers in March, marking the company's first public recruitment in ten years.
And as reported by The East Asia Daily, Kia Motors (000270.KS) attracted nearly 50,000 applicants for 100 technician positions last year.
The Federation of Korean Trade Unions (FKTU) stated in a petition to the parliament that it is necessary to raise the retirement age and maintain job stability to ensure employment stability and proper income for the elderly, reducing unemployment and preventing poverty among the elderly.
