Reasons for the Increase in 'Working Elderly'... "Income Base Expansion for the Elderly Needed"

Bank of Korea, Report on 'Analysis of Factors Behind Rising Employment Rate Among Elderly'
Allowances from Children Increase, but Living Expenses Rise Rapidly
Employment Rate Growth Higher Among Low-Income Groups

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] As the employment rate of the elderly aged 60 and over rose to 42.9% last year, an analysis has emerged suggesting that instead of reducing involuntary labor supply among the elderly, an environment should be created to encourage voluntary labor supply.

The Bank of Korea stated in its report "Analysis of Factors Behind the Rise in Elderly Employment Rate," published in the Monthly Survey and Statistics on the 31st, "Since 2010, the number of employed elderly has rapidly increased, and the employment rate of the elderly has also continuously risen."

From 2010 to last year, the number of employed elderly increased by 2,668,000, accounting for about 82% of the total employment increase of 3,240,000. During the same period, the overall employment rate rose from 58.9% to 60.5%, while the elderly employment rate increased from 36.2% to 42.9%.

According to the Bank of Korea, analyzing the factors behind the increase in elderly employment showed that since 2010, compared to population growth, the influence of employment rate factors has gradually increased, with labor supply factors (rise in economic activity participation rate) leading the rise in employment rate.

In particular, despite the poor quality of elderly jobs due to low wage levels, labor supply increased significantly. Also, a considerable number of jobs re-employed by the elderly after retiring from their main jobs were found to have low relevance to their previous jobs and poor wage levels.

However, the Bank of Korea viewed that although Korea’s public pension level is lower compared to OECD countries, the recent increase in pension recipients and average pension amounts means the impact of public pensions on the increase in elderly labor supply is limited.

Furthermore, it was suggested that the trend of decreasing private transfers received by the elderly from their children, along with rapidly rising living expenses for the elderly, may have acted as factors increasing labor supply. According to the survey, in 2008, 76% of the elderly received an average of 2,514,000 KRW (annual basis) from their children, but in 2020, 65.2% received about 2,071,000 KRW.

Increases in spouse employment and improvements in health status were also known to be related to the increase in elderly labor supply. Additionally, the employment rate increase was higher among low-income elderly with no or low non-labor income.

The Bank of Korea emphasized, "It is necessary to expand the income base of low-income elderly who must work involuntarily even in difficult labor supply situations through expanded social welfare spending and increased basic pension levels," and added, "Conditions should be created to allow longer work in main jobs through re-employment after retirement to efficiently utilize accumulated human capital."

This content was produced with the assistance of AI translation services.