No to Legislating an Unreasonable Extension of the Retirement Age

It is problematic that the government is recklessly pushing to extend the retirement age. Forcing retirement-age extensions by law amounts to erecting barriers that block young people’s future. It will not only produce the side effects of an employment cliff, but could also cause broader social stagnation.

In the past, the Park Geun-hye administration aggressively implemented an extension of the retirement age, resulting in a disaster that mass-produced unemployed young people and legally deprived them of job opportunities. We must not repeat this past policy failure, in which extending the retirement age strengthened the privileges of vested interests in the labor market and deepened social polarization.

The benefits of extending the retirement age serve to reinforce the interests of entrenched groups such as aristocratic unions. If powerful groups like the Korean Confederation of Trade Unions, which have already enjoyed high wages and stable employment, demand retirement-age extensions, and the government grants those demands, it is turning its back on workers as a whole.

Artificially preserving the jobs of vested-interest groups sacrifices young people seeking new employment, undermines organizational competitiveness, and reduces jobs across our economy as a whole.

For the government and the National Assembly to mandate the retirement age by law is excessive intervention in the labor market and nothing more than a measure that ignores market principles. To break from the labor-market principles commonly observed around the world and force employment contracts to be maintained until age 65 reveals a grave level of state control. It is an abuse of legislation that is difficult to find even in communist China or socialist states.

According to statistics, people in their 60s make up the largest number of employed workers in our society. Already, those in their 60s are being employed in the labor market through voluntary contracts. There is no reason for the government to interfere and impose this by law.

People in their 60s are a generation with both the motivation to work and experience, so as long as they are willing to be reemployed, they can find jobs at any time. If some people need knowledge suited to a new era, it would be desirable for the government to provide retraining opportunities to help them obtain the jobs they need.

The government must stop taking away job opportunities from young people. Government ministries, including the Ministry of the Interior and Safety, are encouraging retirement-age extensions on the grounds that they are providing jobs for older people. This is misguided administration.

Without any reflection on having indiscriminately increased the number of civil servants over the past 10 years and thereby increased the burden on the public, trying only to protect vested interests is something public officials should never do.

Employment of older workers will naturally increase if wages are aligned with productivity. Because the law now mandates the retirement age, the seniority-based pay system is still in place, under which workers after their 50s receive excessively high wages compared to their lower productivity. This must first be converted to a performance-based pay system. On that basis, employment extensions at individual workplaces can be carried out voluntarily.

Providing job opportunities for young people is more urgent than extending the retirement age. In particular, large business workplaces and the public sector should offer more job opportunities to young people so that our society can move forward in a future-oriented direction.

Sung-no Choi

President, Center for Free Enterprise (CFE)

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Original title: 무리한 정년연장 법제화는 안돼

Author: Sung-no Choi

Date: 2024-11-26

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=27105