On the 20th, the Democratic Party of Korea's Special Committee on Retirement Extension, which is pushing for the legislation of the 'extension of retirement age to 65,' held a public discussion at the National Assembly to focus on financial and tax support and the design direction of the system to ensure a smooth increase of the legal retirement age to 65. Participants emphasized that 'extending the retirement age is an inevitable task of the times due to demographic changes,' and noted that it should be supported by ▲ easing the burden of labor costs on corporations ▲ minimizing the impact on youth employment ▲ establishing institutional mechanisms for on-site settlement.
The discussion held under the theme of 'Financial support and securing budget for the realization of retirement extension policy' was attended by Chairperson So Byeong-hoon, who is also a member of the special committee, Member Kim Young-hwan, who presided over the discussion, Secretary Kim Joo-young of the National Assembly's Environment and Labor Committee, along with Professor Hwang Deok-soon from Pukyong National University, Director Min Gyeong-sin from the Ministry of Economy and Finance, Director Eom Dae-seop from the Ministry of Employment and Labor, Professor Park Cheol-seong from Hanyang University, and Policy Director Hong Seok-hwan from the Korean Confederation of Trade Unions (KCTU).
'The phased promotion of legal retirement extension' is a campaign promise of President Lee Jae-myung from the 21st presidential election and a national task. According to the National Planning Committee, the government plans to amend the Age Discrimination in Employment and Older Workers' Employment Promotion Act (Senior Employment Act) this year through social discussions to raise the current retirement age of 60 to 65 and to strengthen financial and tax support to reduce the burden on corporations.
The plan for retirement extension is being discussed intensively in the 'special committee on retirement extension,' which includes ruling party lawmakers, the Korean Trade Union Congress, the Korean Confederation of Trade Unions (KCTU), the Korea Federation of Small and Medium Enterprises, as well as youth and experts. The ruling party has shown its policy drive by launching the 'Retirement Extension Task Force' in April and recently elevating it to a special committee.
Committee members emphasized during the discussion that financial and tax support are essential for establishing the 'retirement extension to 65' system.
Chairperson So Byeong-hoon noted, 'The extension of the retirement age is not just a generational issue, but a task of our times for the younger generation and their parents to achieve a sustainable life,' adding that 'given the differing concerns between labor and management, sufficient discussions and mutual agreements are necessary. However, above all, to ensure that the system is stably established, financial guarantees and a tax support structure must be in place.'
Member Kim Young-hwan also stated, 'Detailed policy design is necessary, and support must be backed in fiscal policy and tax expenditures.'
The main issues regarding the legislation of retirement extension are the timing and methods of implementation and the establishment of measures to ease the burden on corporations.
Professor Hwang Deok-soon, a specialized committee expert who presented on that day, stated, 'The broad direction of retirement extension is set, but how to specify it and how to design the support system are important tasks,' presenting the critical issues of legislation and policy design.
Professor Hwang further noted, 'When implementing a gradual increase in the retirement age to 65, opinions differ on whether it should first apply to large corporations and public institutions or to smaller enterprises.' He emphasized that we should first review whether to differentiate based on the size of the business or whether it is a public institution, similar to when the 60-year retirement system was introduced in 2013. In the 22nd National Assembly, proposals have been made to first implement this for large corporations and public institutions (proposed by former member Kang Hoon-sik) and to start with smaller enterprises (proposed by member Park Jeong).
He also emphasized that 'within the extended employment period in corporations, labor and management must agree on what tasks workers will perform, and whether adjustments to working hours and wages are needed.' He added that the labor union representative committee proposed by the National Planning Committee should be institutionalized early to support a system that can mediate conflicts regarding job duties, wages, and working hours at business sites. He also suggested that the labor committee should temporarily take on this role.
Professor Hwang also stated, 'The question is how the government will support the cost-sharing for corporations and workers that enter into extended employment,' suggesting that intensive financial and taxation support measures such as expanding the elderly employment incentive, partial support for social insurance premiums, and tax credits should be prepared. He particularly pointed out that, based on demographic structures, 'the burden from the extension of retirement age will concentrate in the late 2020s to early 2030s,' emphasizing that significant financial input will be necessary during this period.
Additionally, he cited securing flexibility in the management of public sector personnel and alleviating concerns about discouraging new youth employment as major tasks. Professor Hwang added, 'The public sector needs flexible management of staffing temporarily,' suggesting that a management method considering the age-based support structure of individual institutions could be introduced. He also pointed out the need to think about support systems that can minimize impacts on youth employment, proposing to supplement the integrated employment tax credit system as a means of support. The integrated employment tax credit system allows for corporate tax reductions based on an increase in the number of regular employees compared to the previous tax year.
Still, he predicted that the implementation of the retirement extension in 2026 would be difficult due to the sharp issues at stake. Professor Hwang remarked, 'Given such procedures, it seems realistically impossible to immediately implement the retirement extension in 2026,' adding, 'If it is to be implemented in 2026, numerous discussions must be concluded within this year, but that seems improbable. There are still several important procedures that need to be realistically considered.'
Some discussants raised concerns that the burden on corporations could increase and innovation might decline. Professor Park Cheol-seong stated, 'If the period in which wages exceed productivity is extended by about five years, the burden of labor costs on corporations will increase,' pointing out that this could not only lead to investment stagnation, but also to promotion bottlenecks, decreased organizational vitality, and a rise in non-monetary cost burdens such as declines in innovation.
Director Min Gyeong-sin of the Ministry of Economy and Finance acknowledged that 'the direction of extending retirement age is ultimately correct,' but added that 'issues such as youth employment and easing the burden on corporations must be resolved through social dialogue.' He stated that he would review support measures such as integrated employment tax credits, income tax reductions for small and medium-sized enterprises, and elderly employment support funds after the retirement extension measures are specified.
Director General Hong Seok-hwan of the Korean Confederation of Trade Unions (KCTU) argued that the government should change the 'elderly employment support fund' that provides support to businesses employing workers over 60 at small and medium-sized enterprises to 'retirement extension support funds' and should extend the duration and amount of these funds.
The special committee on retirement extension plans to prepare a roadmap for financial and taxation support by reflecting the opinions raised in this discussion and to pursue legislation by November after achieving social consensus by September.
Secretary Kim Joo-young of the special committee stated, 'When the Task Force was launched, we said we would finish discussions by September and legislate by November, and we are still aiming for that goal,' adding that the opinions from the discussion will be actively incorporated when pursuing the legislation of retirement extension.