Last Friday I was privileged to attend a social policy conference, where I heard some excellent presentations by academics and policymakers on the elderly in Korea. They have a hard life: Korea Expose – an excellent site for social commentary – writes in No Country For Old People that
45 percent of South Korean households consisting of seniors over the age of 65 make less than half the median household disposable income. Among seniors who live by themselves, that figure jumps up to more than 76 percent. In comparison, the OECD average is 13.5 percent.
The article describes in depth the heartbreaking life of the 1.75 million seniors making a living pulling recycling carts, sometimes into their 90s.
These figures are going to get worse, for two reasons. One is the demographic bulge on its way. In 1980, 4% of the population was over 65. Today it’s 12%, and by 2050 it will be 43%, nearly one in two. By 2030, half of employed workers will be over 50. Japan is weathering this shift right now, and devotes 8.9% of its GDP to elder care. Korea spends 1.7%. Clearly something will have to change. But it’s not just a matter of aging, nor of just increasing government spending.
The second reason is retirement: Korea is the only OECD country where the employer sets the age at which you have to stop working. Wages are fixed to seniority – decades of loyalty are rewarded with higher wages, so that someone with 30 years’ experience makes 3.3 times as much money as a new workers. But in order to save money, companies will often force workers to retire in their 50s or even 40s. This sounds ideal, but pensions are approximately $200 a month, which is impossible to live on. So although ‘official’ retirement happens early, Korea has the second-highest actual retirement age in the OECD: 71.1. It’s that huge gap – between mandatory and actual retirement – that gets filled with recycling carts.
The government is aware of the problem and has legislated a higher, mandatory retirement age of 60, beginning in 2017. This means that workers with seniority can’t be pushed out of their jobs in favour of younger, cheaper workers. But the giant corporations that form the lion’s share of the Korean economy balked at this and forced a compromise: ‘peak wages’. This means that wages will peak at age 55 and drop progressively until age 60.
If workers retire early, the government has to pay pensions – which ultimately come from tax dollars on corporations, or on workers’ wages paid by corporations. If workers retire later, corporations have to pay higher wages directly. Either way, the elderly – who literally built the Korean economy with their own sweat and blood in a few generations – are left with very little.
Unions have to fight for older workers’ rights. If workers could maintain their wages till they retire, and then be guaranteed decent pensions afterwards, this would not only solve elderly poverty but provide space for new, younger workers. And that, in turn would go a long way to correcting a mistaken impression many people have of Korea.
The long working hours and low productivity of Korea have been documented many times. This often gets translated as an into Orientalist terms, blaming ‘culture’, Confucianism or group loyalty – the exact term isn’t important, but it lends the impression of there being something fundamentally irrational in the Korean psyche that values desk-warming.
The explanation is both simpler and rational: if you’re going to be forced to retire at age 50, it makes perfect sense to work as much as possible now. Earn as much as you can, advance as far as possible, because your company job won’t be around for as long as you need it.
Yet if workers’ future was guaranteed, the spin-off benefits would be incalculable. Parents would no longer have to push their kids to get into a good university to get a corporate job, in order for the kids to take care of them in their old age. Families would no longer be split up as young people, often supervised by their moms, are sent overseas to the ‘good’ university, leaving fathers working long hours back home alone (the Korean term for them is ‘goose father’, referring to migration.) Young adults could have time to experiment with different career and life choices instead of being focused on getting into a company as soon as possible. Conversely, those who didn’t choose a corporate job wouldn’t feel washed up if they hadn’t ‘made it’ by the time they’re 30. In short, the promise of future security would open up huge possibilities in the present.