At a time when intergenerational tensions are deepening over youth unemployment, labor market restructuring, and the wage-peak system, society is increasingly reflecting on what truly matters in work and life—values far more fundamental and meaningful than salary alone. (Photo: poster of the film The Intern)
SEOUL, Nov. 5 (Korea Bizwire) — South Korea’s ruling party is moving swiftly to legislate an extension of the retirement age to 65 by the end of the year, backed by the nation’s two largest labor unions. But the country’s major business groups are warning that the proposal could amplify management uncertainty and deepen structural problems in the labor market.
The Federation of Korean Industries (FKI) and the Korea Employers Federation (KEF) said that extending the retirement age without reforming the wage and employment systems would raise corporate costs while discouraging hiring and investment, especially as companies struggle with U.S.-China trade tensions and slowing global demand.
In a report submitted to the National Assembly this week, the KEF urged “caution and balance,” noting that the last retirement-age increase—to 60 in 2016—mainly benefited older workers at large companies while widening disparities with younger employees and those at smaller firms. The number of senior regular workers at conglomerates rose sixfold over the past two decades, while youth employment has declined slightly.
The FKI estimated that maintaining workers aged 60 to 64 could cost businesses roughly 30.2 trillion won (US$22 billion) over five years, equivalent to employing about 900,000 younger workers. Small and mid-sized enterprises, whose labor costs already account for nearly twice the share of total revenue as large firms, would bear the heaviest burden.
To mitigate these risks, business leaders have proposed introducing a “Senior Reemployment Promotion Act” to encourage companies to rehire retirees under flexible conditions, rather than mandating a blanket retirement-age extension.
Labor economists have echoed that broader reform is overdue. They argue South Korea’s rigid labor market—marked by a sharp divide between regular and nonregular workers—could limit adaptability in an era of artificial intelligence and automation.
Seo Dong-hyun, a researcher at the Bank of Korea, wrote recently that Korea’s employment structure “restricts innovation and productivity while worsening inequality,” calling for greater flexibility, stronger social safety nets, and fairer treatment across employment types.
Despite calls for balance, the political momentum appears to favor the unions and the ruling bloc, which see the reform as a social equity measure. Yet to much of the business community, it feels like a premature step that could make the country’s labor landscape even more inflexible.
M. H. Lee (mhlee@koreabizwire.com)
