Editorial: Voluntary rehiring works better than raising retirement age

Job seekers look at a bulletin board at a job center in Seoul. /Yonhap

In South Korea, the number of senior workers rehired after the legal retirement age of 60 hit a record 770,000 last year, rising 5% from the previous year and doubling since 2016, when the retirement age was extended. Many companies already keep older employees if their expertise remains valuable. For workers, longer life expectancy and the gap before receiving national pension benefits make continued employment important. Industries facing labor shortages and small businesses also benefit from retaining skilled seniors. This creates a win-win situation for both employers and employees.

The Democratic Party of Korea pledges to gradually raise the legal retirement age to 65, which would increase the burden on businesses, forcing them to keep workers they may no longer need. In response, companies might reduce new hires or speed up automation, shrinking job opportunities for younger workers. A better approach is to support voluntary continued employment. Japan, which entered a super-aged society before South Korea, never mandated a retirement age of 65 by law. Instead, companies can choose to extend, abolish, or replace retirement with rehiring older employees.

Due to inadequate pension income, South Korea has the highest employment rate for those aged 65 and older in the OECD. Still, 35% of working seniors hold low-paid manual jobs, and many run small businesses. As 9.54 million second-wave baby boomers retire, the number of elderly self-employed will rise. Increased competition and lower income will worsen senior poverty and debt risks.

As working into one’s 60s becomes common, expanding wage jobs for older workers in ways that help both companies and individuals is essential. Continued employment, rather than a uniform retirement age extension, offers a more practical solution.