Korea should improve the quality of employment for older workers

Moon Jae-in 2017

Republic of Korea H.E. Mr. Moon Jae-in, President 21 September 2017 (72th Session) (United Nations, 2017)

This article is brought to you in association with OECD.


Korea should reform its employment regulations and improve social protection in order to make work more rewarding for older workers and tackle old-age poverty, according to a new OECD report.

Working Better with Age: Korea says that workers aged 50-75 years are more likely to work than their peers in other OECD countries but more often in jobs of poor quality, with low job security and wages, and limited access to social insurance. As a result, poverty rates are much higher in this age group than in almost any other OECD country.

Tackling this challenge is critical, according to the report, as Korea’s population is ageing faster than in any other OECD country. The population’s median age could reach 55 years by the mid-2050s, compared with around 40 years today. Over the same period, the old-age dependency ratio (population aged 65+ over the population aged 15-64) will increase from 20% to 70%, 20 percentage points above the OECD average.

At almost 70%, Korea’s employment rate of older workers aged 50-64 is relatively high – 6.6 percentage points above the OCED average. But most workers retire early from their main job before reaching 55 and have to start new employment or a “second career” in poor quality, highly insecure and low-paid jobs or become self-employed. Workers in Korea effectively retire at an average age of 71-73 years – the oldest of any OECD country. This implies that they typically spend 20 years in precarious employment before leaving the labour market.

For most workers, early retirement from the main job results in lower earnings and potential hardship. Korea has the second-highest rate of relative income poverty among people aged 50-64 among all OECD countries.

Structural reforms could reduce labour market duality, which affects older workers disproportionally. Measures should be taken to reduce the gap between wages and productivity, which increases with age and contributes to pushing older workers out of regular jobs, and the gap in job quality between regular and non-regular jobs.

This requires tackling employers’ practices with respect to early retirement plans while at the same time moving away from seniority-based practices for setting wages and granting promotions, reforming the hiring and dismissal rules for regular and non-regular work, and strengthening social protection. Providing good opportunities for workers to upgrade their skills and learn new ones throughout their working careers is also a key requirement for fostering longer working lives in good quality jobs.

Recent government initiatives to postpone the age of mandatory retirement, to promote a job- and competency-based system for setting wages, and to reduce working time, could help increase older workers’ productivity and improve working conditions, but questions remain as to whether these measures will be forcefully implemented.

The OECD recommends that Korea take further action in three areas.

First, employers should be encouraged to retain older workers in their main jobs, e.g. by:

  • Fostering the introduction of wage peak systems to ease the postponement of the age of mandatory (early) retirement.
  • Proactively promoting the implementation of job- and skill-based professional appraisal measures, instead of seniority-based practices.
  • Providing additional employment rights for temporary agency workers as well as new business opportunities in the temporary work agency sector.

 

Secondly, a number of measures could promote the employability of workers, such as:

  • Strengthening second-career guidance for middle-aged and older workers.
  • Monitoring closely the implementation of the new guidelines on working time.
  • Introducing employer-paid sick leave and a statutory cash sickness benefit to facilitate the return to the main job of workers experiencing health problems.

Thirdly, a number of measures could improve the income situation of older workers, such as:

  • Raising payments for persons over age 50 provided by the earned income tax credit and improving the coverage among older self-employed workers.
  • Targeting the Basic Pension to the most needy and increasing benefit amounts.
  • Improving the pension scheme coverage among self-employed and non-regular workers and making the scheme financially sustainable.
  • Fostering the implementation of retirement pension plans, especially in small and medium-sized enterprises.

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Stopping antimicrobial resistance would cost just USD 2 per person a year

Opening Remarks by H.E. Ambassador Yang Yanyi, Head of the Chinese Mission to the EU at the Chinese Fashion Night

FROM THE FIELD: South Sudan’s green shoots, highlight environmental recovery from war

European Commission determined to conclude EU-Mercosur trade deal this year despite French concerns

Refugee crisis: Commission proposes a new plan urging EU countries to help Italy

Rising insecurity in Central Africa Republic threatens wider region, Security Council told

PM May fosters chauvinism, declares trade war on Europe

Statement by Cecilia Malmström, Member of the EC in charge of Trade, on the successful conclusion of the final discussions on the EU-Japan Economic Partnership Agreement (EPA) – Brussels, 08 Dec 2017. (Copyright: European Union; Source: EC - Audiovisual Service; Photo: Georges Boulougouris)

The EU and Japan seal free trade pact that will cover 30% of global GDP

World Cancer Day: Early cervical cancer diagnosis could save lives of over 300,000 women

The ECB again takes care of the bankers not the people

MWC 2016 LIVE: Ingenu steps up efforts to build LPWA networks across the globe

The EU Commission by serving the banks offers poor support to European mainstream political parties

We know ethics should inform AI. But which ethics?

It’s ‘time for concrete action’ says UN chief, welcoming inter-Korean agreement

“Financial crisis will not happen in China!”, the Chinese Premier underlines from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

How will the NATO-EU competition evolve in the post Brexit era?

Third Facebook-Cambridge Analytica hearing: data breach prevention and cures

May led Britain to chaos, now looks for way out with unpredictable DUP

How can consumers be effectively protected from insurance sellers?

EU decides “in absentia” of civil society

New energy security framework will help meet growing needs in East Africa, sustainably – UN economic wing

Close to 7,000 evacuated from Syrian towns after enduring nearly 3-year siege

Chart of the day: The internet has a language diversity problem

Reality Shock

Intel @ European Business Summit 2014: Better decisions now, the new business dashboard 

EU, Brazil to hold high level Summit in Brasilia

UN says ‘many humanitarian achievements’, one year after ouster of ISIL from Mosul

Scientists can lead the fight against fake news

The sad plight of fledging doctors

IMF: All you want to know about Argentina

Vaccinations and the movement of anti-vaccers

Why we need a moderate approach to moderating online content

A Sting Exclusive: “Europe must be more ambitious in COP21 and lead on climate finance and sustainable development”, Green UK MEP Jean Lambert points out from Brussels

Confronting neo-mercantilism: why regulation is critical to global trade

How the powerful science of behaviour change can make us healthier

South Sudan’s foreseen genocide: from “Never Again” to “Again and Again and Again”?

Ukraine pays the price for lying between Russia and the EU

Breaking barriers between youth in the new tech era: is there an easy way through?

New roadmap toward healthier and cleaner oceans adopted by UN Environment and European Commission

This Chinese tech giant’s latest gadget is… a bus

Oh, well, you are wrong, Google responds to the European Commission

‘Favour dialogue’ over violence, UN chief urges all parties following clashes in Mali’s capital

COP21 Breaking News_03 December: UNFCCC Secretariat Launches Forest Information Hub

How music can help children with autism connect

Consumers suffer three defeats

Trump questions US – Europe kinship, approaches Russia

The European Sting @ Mobile World Congress 2014, Creating What’s Next for the World. Can EU Policy follow?

Here’s how to prepare South-East Asia’s young people for the future

What the global Internet’s stakeholders can learn from Europe’s new data law

In the future of work it’s jobs, not people, that will become redundant

Summer JADE Meeting 2015: We came curious, we left inspired

Women vital for ‘new paradigm’ in Africa’s Sahel region, Security Council hears

2016 crisis update: the year of the Red Fire Monkey burns the world’s markets down

Parliament: Last compromise on bank single resolution mechanism

Threats from mammoth banks and Brussels fuel May’s poll rates

Why Eurozone needs a bit more inflation

UN chief welcomes ‘first concrete step’ in normalizing Eritrea-Ethiopia relationship

Eurozone: In vicious cycle of disinflation and unemployment?

Guterres expresses ‘grave concern’ following explosion at large political rally for reform-minded Ethiopian Prime Minister

A few, or rather two, trade and economic alliances may rule our brave new world

UN gender agency hails record-breaking number of women in new US Congress as ‘historic victory’

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s