Retirement age push raises youth job fears

Korea's two largest umbrella labor organizations, the Korean Confederation of Trade Unions (KCTU) and the Federation of Korean Trade Unions (FKTU), are pressing for immediate legislation to raise the mandatory retirement age.

In a joint statement issued on Monday, the two organizations called for legislation extending the statutory retirement age to 65 "without poisonous provisions that undermine workers' rights." They rejected the ruling Democratic Party's compromise proposal, which would gradually raise the retirement age from 60 to 65 between 2029 and 2037 while allowing companies to adopt post-retirement reemployment programs and reform wage systems.

Labor groups argue that a phased approach would fail to address the income gap many workers face between retirement and pension eligibility. They contend that delaying implementation would unfairly disadvantage those nearing retirement and insist the legislation should take effect immediately. They also oppose linking a higher retirement age to changes in wage systems or broader labor reforms. In other words, they seek longer employment without accepting lower wages or other concessions.

Given Korea's rapidly aging population and shrinking working-age workforce, extending the retirement age is becoming increasingly unavoidable. The question is not whether to do so but how.

A uniform extension without reforming Korea's seniority-based wage system, under which pay rises primarily with years of service, would place a significant burden on employers. Faced with higher labor costs, companies are likely to reduce hiring, making it even harder for young people to find jobs.

That risk is no longer theoretical. The decline in youth employment in May was the steepest in four years, while the youth employment rate fell to 43.8 percent, marking its 25th consecutive monthly decline. As more young adults struggle to find work, their share among households in the bottom 20 percent for both income and net assets has doubled over the past five years.

For that reason, extending the retirement age should be discussed as part of broader labor market reform, including measures to improve youth employment and shift compensation toward job responsibilities and performance rather than seniority. Japan's approach, which allows companies to choose between extending retirement and rehiring retired employees, offers one possible model.

The rapid advance of AI, particularly physical AI capable of replacing human labor, will only intensify these challenges. Korea should seek a broad social consensus on reforms that minimize the economic impact of a higher retirement age while preserving employment opportunities across generations.

An extension of the retirement age should not be used to protect the vested interests of unionized workers at large corporations.