The ruling party has begun full-fledged discussions to extend the statutory retirement age from 60 to 65. Extending the retirement age is a demand from the Federation of Korean Trade Unions and the Korean Confederation of Trade Unions (KCTU).
There are concerns among management circles and some members of the public that if Korea's uniquely rigid labor market—where it is hard to fire employees—remains unchanged while only the retirement age is extended, a hiring cliff and intergenerational conflict could worsen. The youth unemployment rate for ages 15 to 29 in the first quarter this year was 7.4%, the highest for a first quarter since 2021 (9.9%) in five years.
Against this backdrop, some say Korea should look to the "flexible retirement extension" models adopted by rapidly aging Japan and Singapore. In Japan, where the statutory retirement age is 60 as in Korea, if a worker wants to continue after retirement age, corporations must choose one of three options up to 65: extend the retirement age, rehire after retirement, or abolish the retirement age. Singapore requires corporations to rehire employees after the retirement age (63) up to 68.
◇ Two umbrella unions: "Raise the retirement age to 65 at once" vs. KEF: "Excessive burden on corporations"
The Democratic Party is reportedly reviewing a plan to gradually extend the retirement age over the next 10 to 12 years. For example, the retirement age would be raised to 61 in 2028, 62 in 2030, 63 in 2032, 64 in 2034, and 65 in 2036.
By contrast, the two umbrella unions reportedly insist that the statutory retirement age should be extended from 60 to 65 at once. They say a phased increase could create income gaps for certain age groups.
In response, the Korea Enterprises Federation (KEF) pushed back, saying, "If only the statutory retirement age is extended without revamping high seniority-based wages and labor rigidities, it will impose an excessive burden on corporations." If the structure that makes it hard for corporations to dismiss employees remains while the retirement age is extended, they may shy away from hiring in the first place.
◇ Japan and Singapore achieve a natural retirement extension through "rehiring after retirement"
Like Korea, Japan and Singapore, which face aging populations, use "rehiring after retirement" as a way to naturally extend working lives. When corporations rehire workers after retirement, they typically adjust employment conditions—such as actual working hours and performance—and hire them on fixed-term contracts. This reduces corporations' labor cost burdens.
Since 2013, Japan has required corporations to choose one of the following for workers up to 65: ▲ extend the retirement age ▲ rehire after retirement ▲ abolish the retirement age. According to KEF, as of last year, 65% of Japanese corporations chose rehiring after retirement, while 31% opted to extend the retirement age.
Singapore's statutory retirement age is 63, but corporations are required to rehire employees up to 68. In other words, "rehiring after retirement" is mandated while leaving the retirement age in place. The Singaporean government is reportedly pursuing a plan to extend the current retirement age to 65 and the rehire age to 70 in view of the aging trend.