🚨 Mandatory Retirement Age Extension

Today Korean Social News for Beginners | 2025.11.16

0️⃣ Youth Employment Crisis Amid Retirement Age 65 Discussion: Generational Job Balance Becomes Key Challenge

📌 As Retirement Extension to 65 Proceeds, Youth 'Resting' Population Surges... "Job Mismatch Is the Core Issue"

💬 As the government and ruling party actively discuss extending the mandatory retirement age to 65, the number of young people in their 20s and 30s who are 'resting' (not working or job-hunting) has surged to nearly 730,000. While the overall employment rate has risen due to increased hiring of workers aged 60 and above, the employment rate for young people has stagnated or declined, creating a growing generational gap in the labor market. According to Statistics Korea, as of October 2025, the overall employment rate reached a record high of 63.8%, but young people are increasingly taking breaks from job searching because they cannot find jobs or the available jobs don't match what they want. Experts warn that while retirement age extension helps employment stability for older workers, it could reduce new hiring opportunities for youth and intensify generational conflict. There are growing calls that retirement age extension discussions must be accompanied by youth job creation, job-centered wage system reform, and industrial structure transformation.

💡 Summary

• Mandatory retirement age extension is a policy that delays the official retirement age so workers can continue working.
• The number of young people in their 20s and 30s who are 'resting' has reached 730,000, showing worsening youth employment conditions.
• Discussions for extending retirement to age 65 are underway, but concerns about reduced youth job opportunities make generational balance a key issue.

1️⃣ Definition

Mandatory retirement age extension refers to a policy that delays the legally set retirement age, allowing workers to continue working until an older age. Currently, Korea's legal retirement age is 60, and the government is pushing to extend it to 65 to respond to an aging society and secure retirement income.

Retirement age extension provides stable employment opportunities for older workers and allows businesses to utilize experienced workers. However, it also raises concerns about increased labor costs for companies, reduced new hiring for youth, and intensified job competition between generations. Therefore, retirement age extension must be discussed alongside various complementary measures such as wage peak systems, job redesign, and youth job creation.

💡 Why Is This Important?

• With increased life expectancy, people can now work for over 20 years after age 60.
• There is a serious income gap problem between retirement at age 60 and the national pension starting at age 65.
• Generational job distribution and expanding youth employment opportunities must be considered together.
• This is an important policy turning point that will reshape the labor market structure in an aging society.

2️⃣ Current Status and Issues of Retirement Age Extension

📕 Worsening Youth Employment and Surge in 'Resting' Population

• The economically inactive population in their 20s and 30s is growing rapidly. Key statistics include:

  • As of October 2025, the 'resting' population among people in their 20s and 30s reached 729,000, an increase from the previous year.
  • Economically inactive population refers to people who have no intention to work or are not job hunting.
  • More young people are giving up job searches because they cannot find jobs or the available jobs don't match what they want.
  • Job-finding difficulties are particularly severe for highly educated youth with college degrees or higher.

• Youth employment rates are stagnating or declining. Major problems include:

  • The overall employment rate rose to 63.8% due to increased employment of workers aged 60 and above.
  • However, employment rates for people in their 20s and 30s have not improved or have actually fallen.
  • Job mismatch is intensifying as young people want quality jobs but avoid small and medium-sized company positions.
  • Employment statistics alone cannot accurately capture the real labor market situation for youth.

📕 Retirement Age 65 Discussion and Generational Conflict

• The government is pushing to extend retirement to age 65. Key background includes:

  • With increased life expectancy, people now must live over 20 years after retiring at age 60.
  • There is a 5-year income gap because the national pension starts at age 65 while retirement is at age 60.
  • The working-age population is decreasing due to low birth rates, making it necessary to utilize older workers.
  • Major OECD countries operate retirement ages of 65 or higher, suggesting Korea should follow international trends.

• Young people worry about reduced job opportunities. Major concerns include:

  • If retirement is extended, older workers will stay employed longer, potentially reducing new hiring for youth.
  • Companies may also be reluctant to hire new workers due to increased labor cost burdens.
  • With youth unemployment already high, retirement extension could intensify job competition between generations.
  • Young people argue that youth job expansion and new industry development should come before retirement extension.

📕 Corporate Burden and Wage Peak System Controversy

• Companies worry about increased labor costs. Key issues include:

  • If retirement is extended by 5 years, companies' labor cost burden will increase significantly.
  • Many companies want to expand wage peak systems and reduce wages after a certain age.
  • However, the Supreme Court ruled that reducing wages based solely on age without reasonable grounds is discrimination.
  • Wage adjustments can only be justified with objective evidence such as job content changes or productivity changes.

• Labor groups oppose unilateral wage cuts. Major positions include:

  • Expanding wage peak systems alongside retirement extension places a double burden on older workers.
  • If wage adjustments are necessary, they should be accompanied by job redesign, not unilateral cuts.
  • It is wrong to discriminate based only on age when older workers are maintaining productivity.
  • Various approaches such as flexible work and part-time options should be discussed together beyond just wages.

💡 Key Issues in Retirement Age Extension

1. Reduced Youth Jobs: Retirement extension may shrink new hiring capacity, intensifying generational job competition
2. Job Mismatch: Gap between jobs youth want and actual available jobs increases 'resting' population
3. Corporate Labor Cost Burden: 5-year retirement extension increases labor costs, pressuring business operations
4. Wage Peak System Controversy: Unclear boundary between reasonable wage adjustment and age discrimination
5. Income Gap Problem: 5-year income interruption between retirement at 60 and national pension at 65

3️⃣ Tasks for Reasonable Retirement Age Extension

✅ Expanding Youth Jobs and Resolving Job Mismatch

• Quality youth jobs must be increased through new industry development. Key directions include:

  • New growth industries like semiconductors, biotechnology, and AI must be developed to create jobs youth prefer.
  • Support for startups and venture companies should be strengthened to promote youth entrepreneurship and employment.
  • New jobs from digital and green transformation must be actively discovered.
  • Working conditions and treatment at small and medium-sized companies should be improved to encourage youth employment there.

• Education and job retraining programs must be strengthened. Key measures include:

  • University education should be linked with industry needs to train talent with practical skills.
  • A job placement support system should be built to match jobs youth want with actual positions.
  • Vocational training and retraining programs should be expanded to strengthen youth capabilities.
  • The national technical qualification system should be improved to develop certifications that actually help with employment.

✅ Reducing Corporate Burden and Reforming Wage Systems

• Transition to job-centered wage systems is needed. Key tasks include:

  • Reform from seniority-based to job value and performance-based wage systems.
  • Equal pay should be provided for the same job regardless of age.
  • Jobs for older workers should be redesigned to utilize their experience and know-how.
  • New jobs suitable for older workers such as mentoring, consulting, and training should be developed.

• Government financial support and tax benefits should be expanded. Key measures include:

  • Companies employing older workers should receive wage subsidies or tax credit benefits.
  • Financial support should be strengthened to reduce labor cost burdens on small and medium-sized companies.
  • Tax benefits for new youth hiring should be expanded to encourage youth employment.
  • A structure should be created where society as a whole shares the corporate burden of retirement extension.

✅ Social Consensus and Phased Implementation

• Sufficient labor-management-government consultation is needed. Key procedures include:

  • Consensus should be reached through social dialogue involving labor, management, and government.
  • To minimize generational conflict, voices of both youth and older workers should be balanced.
  • Customized retirement extension plans should be prepared considering industry and company size characteristics.
  • Policy should be implemented after forming sufficient social consensus to reduce confusion.

• Retirement should be extended in phases. Key approaches include:

  • Rather than extending to 65 all at once, gradual implementation with about 5 years of transition time is needed.
  • Starting with large companies and public institutions first, then applying to small and medium companies later could be considered.
  • A pilot operation period should identify and improve problems before full implementation.
  • Complementary measures like wage peak systems and job redesign should be prepared simultaneously with retirement extension.

4️⃣ Related Terms Explained

🔎 Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion

• The Elderly Employment Promotion Act prohibits age discrimination and promotes elderly employment.
  • This law prohibits discrimination against workers based on age without reasonable grounds and was enacted to guarantee stable employment opportunities for elderly workers. Retirement-related regulations are also specified in this law.
  • Key provisions include: First, employers must set retirement age at 60 or above. Second, age restrictions or discrimination in worker recruitment and hiring are prohibited. Third, employers should make efforts to provide continued employment opportunities to workers who reach retirement age. Fourth, the government must implement support policies to promote elderly employment.
  • The law was amended in 2013 to raise the retirement age to 60, implemented from 2016. The government is currently pushing to amend this law again to extend retirement to age 65. Retirement extension aims to utilize skilled workers in an aging society and guarantee retirement income, but corporate burden and generational job competition issues must also be considered.

🔎 Economically Inactive Population and 'Resting' Status

• Economically inactive population refers to people who have no intention to work or are not job hunting.
  • Economically inactive population means people aged 15 and above who are neither employed nor unemployed. To be classified as unemployed, one must be actively job hunting, but economically inactive people have no intention to work or are not job hunting.
  • Economically inactive population is divided into several types. First, 'childcare' is when people don't work to raise children. Second, 'housework' is when people don't work due to household duties. Third, 'attending school/taking courses' is when people attend school or receive education. Fourth, 'old age' is when people have retired due to advanced age. Fifth, 'resting' is when people are resting without a particular reason.
  • The recent surge in 'resting' status among people in their 20s and 30s is becoming problematic. Many of these people gave up job searching after becoming exhausted, or are delaying employment because jobs matching their desired conditions are unavailable. 'Resting' doesn't appear in unemployment statistics but may represent hidden unemployment of people who actually want jobs, making it difficult to accurately understand youth employment situations based solely on employment rates.

🔎 Mandatory Retirement Age 60 Policy

• Mandatory retirement age 60 implemented from 2016 is a policy for elderly employment stability.
  • Mandatory retirement age 60 was introduced through 2013 amendment of the Elderly Employment Promotion Act. Previously, there was no clear legal retirement age and many companies applied retirement at 55, but with increased life expectancy and greater need for retirement income security, the legal retirement age was raised to 60.
  • Implementation was phased. From January 2016, it first applied to public institutions and workplaces with 300 or more employees, and from January 2017, it expanded to workplaces with fewer than 300 employees. This allowed workers at all workplaces to work until at least age 60.
  • There was much confusion when retirement age 60 was implemented. Companies hastily introduced wage peak systems to reduce labor costs, and some drastically cut wages without reasonable grounds, leading to legal disputes. Experts emphasize that sufficient institutional preparation and social consensus are needed in advance to avoid repeating such failures in the retirement age 65 discussion.

🔎 Low Birth Rate, Aging, and Declining Working-Age Population

• The working-age population is rapidly declining due to low birth rates and aging.
  • Working-age population refers to the population aged 15 to 64, representing the age group that can participate in economic activities. Korea's birth rate has dropped sharply while life expectancy has increased, causing the working-age population to start declining after peaking in 2020.
  • The severity of demographic change includes: First, the total fertility rate has fallen to the 0.7 level, the lowest among OECD countries. Second, the elderly population aged 65 and above exceeds 20%, entering a super-aged society. Third, the current working-age population of about 37 million in 2025 is expected to decrease to the 30 million range by 2040. Fourth, the elderly dependency ratio is rising, increasing the burden on society as a whole.
  • In this situation, arguments emerge for utilizing older workers longer. The reasoning is that people in their 60s are still healthy and productive, so forcing early retirement wastes human resources. However, with insufficient youth jobs, simply extending retirement could only increase generational conflict, so experts point out that new industry development and job creation must occur simultaneously.

🔎 Job Mismatch Problem

• There is a large gap between jobs youth want and actual available jobs.
  • Job mismatch refers to a discrepancy between the conditions job seekers want (wages, work environment, job content, etc.) and the jobs actually offered. In Korea, there are insufficient large company and public institution jobs that youth prefer, while small and medium company jobs are avoided.
  • Causes of mismatch include: First, with university enrollment rates exceeding 70%, there are many highly educated people but insufficient quality jobs matching their education. Second, large wage gaps between large companies and small-medium companies make youth reluctant to work for small companies. Third, manufacturing jobs have decreased while service jobs have increased but with poor treatment. Fourth, university education is often disconnected from industry needs, resulting in insufficient practical skills.
  • This causes youth to spend longer job-searching periods looking for good jobs or give up job hunting altogether and remain in 'resting' status. If retirement is extended, companies' capacity for new hiring will further decrease, potentially worsening the mismatch problem. Therefore, comprehensive measures are needed including new industry development, improved treatment at small-medium companies, and strengthened vocational education.

5️⃣ Frequently Asked Questions (FAQ)

Q: When will retirement age 65 extension take effect?

A: No implementation date is confirmed yet, and several years of transition time is expected even after the bill passes.

• Retirement age 65 extension is currently a policy being pushed by the government and ruling party, but no specific bill has been submitted to the National Assembly. Even if a bill passes, it will likely be implemented gradually with several years of transition time to give companies and workers time to prepare. When retirement age 60 was mandated in 2016, there was a 3-year transition period after the law was amended.
• Additionally, implementation timing may vary by industry and company size. Public institutions and large companies may be required to comply first, with small-medium companies applying later. Since retirement age extension requires sufficient consensus among labor, management, and government, it will likely proceed carefully through social dialogue. At this point, experts expect implementation around 2028-2030 at the earliest.

Q: Will youth jobs decrease if retirement age is extended?

A: Simple extension alone could reduce youth jobs, but if pursued together with new industry development, the impact can be minimized.

• The impact of retirement extension on youth employment is complex. First, from a company perspective, employing older workers longer increases labor cost burdens, potentially reducing new hiring. Second, opportunities for youth to fill positions held by older workers may decrease. Third, with fixed total wage budgets, paying more to older workers may reduce room for youth wage increases.
• However, positive effects are also possible. First, older workers' experience and know-how can be used to train younger workers. Second, if new industries and businesses expand, older and younger workers may work in different fields without competing. Third, if government strengthens youth employment support, negative impacts can be offset. Experts emphasize that retirement extension must be accompanied by youth job expansion, new industry development, and job redesign.

Q: Will wage peak systems expand with retirement extension?

A: Wage peak system expansion is possible, but unilateral wage cuts without reasonable grounds are illegal.

• If retirement is extended to age 65, many companies will likely introduce or expand wage peak systems. From a company perspective, employing workers 5 more years while paying the same wage level is a heavy burden. However, the 2022 Supreme Court ruled that "reducing wages based solely on age without reasonable grounds constitutes age discrimination."
• Therefore, to apply wage peak systems: First, job content must change. For example, actual job redesign is needed such as shifting from management to advisory roles or from field work to training junior staff. Second, there must be objective evidence of productivity changes. Third, sufficient labor-management consultation must occur. Fourth, design should minimize disadvantages to workers. Unilaterally cutting wages significantly could lead to legal disputes, so reasonable wage peak system guidelines should be established alongside retirement extension discussions.

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