Extension of Retirement Age to 60
The legal age for retirement is likely to be extended to over 60 from 2008 at the earliest. A new act will be applied not only to public enterprises but also to general corporations.
The government has decided to establish an equal employment promotion act this year in order to extend the retirement age.
The presidents secretariat, who is in charge of measures for the aging society, the Ministry of Labor, and the Ministry of Finance and Economy announced a comprehensive policy for the aging society on Monday.
The government did not state the specific age for the legal retirement like Japan or Singapore, but it will apply the Equal Employment Act to all people aged 18 to 60, so that they are not forced to retire before 60.
Moreover, the policy includes extending the retirement age to over 60 in three phases until 2008, and eliminating an age limit for employment and dismissal.
The government plans to encourage companies to extend the retirement age by providing them with financial support on employment insurance premium and tax cuts from 2005 to 2007. Then, it will set the retirement age over 60 in 2008 and raise it in phases.
The government is also considering tough measures, such as a fine, for companies that fail to observe the law.
A report by the Ministry of Labor shows that the average retirement age in companies with more than 300 regular employees was 56.5 in 2002, so the governments decision is expected to have far-reaching effects.
To share extra corporate burdens caused by the extension, the government has decided to introduce a wage adjustment system, under which labor and management agree on wage cuts on the condition of extending the retirement age. Corporations that adopt the system will receive governments support on wages.
Korea is entering into an aging society at a speed unprecedented in the world, and the economy is slowing down due to the increase in the early retirement. The government policy is aimed at addressing these issues, said an official at the Labor Ministry.
Business and labor communities, however, are against the new policy. The former argues that corporate burdens will increase greatly, and its autonomy will be infringed on; while the latter says that the policy could be used as an excuse for wage cut.
Ho-Gab Lee gdt@donga.com
About Dong-A Ilbo