The International Monetary Fund (IMF) agreed on the need to raise Korea's mandatory retirement age but recommended adjusting the national pension eligibility age and improving the rigid wage structure. It is unusual for the IMF to specifically address a particular country's retirement age issue.
According to the IMF website on the 26th, the IMF, in a special report on Korea's retirement age extension released the previous day, proposed extending the retirement age from the current 60 to 65 while raising the starting age for national pension benefits to 68.
Citing research by the Organisation for Economic Co-operation and Development (OECD), the IMF said, "If the national pension eligibility age is delayed to 68 by 2035, total employment will increase by 14%," and noted, "If the productivity of older adults is maintained, gross domestic product (GDP) in 2070 could rise by 12%."
The IMF also stressed that Korea needs to improve its rigid wage system. The IMF pointed out, "If the retirement age is extended without shifting the seniority-based (step pay) wage structure to a job- and performance-based system, serious side effects may occur." This is because in a structure where wages for older workers continue to rise, extending the retirement age could lead corporations to reduce new hiring.
In addition, the IMF suggested introducing a flexible employment system. The IMF said, "There is research showing that implementing reforms to ease protections for regular workers during economic expansions increases output and employment by an average of 5% in the medium term," emphasizing the need for a flexible employment system that can reduce the burden on corporations and induce a virtuous cycle in the labor market.