20 Years of 'Suffering Lifespan' in an 80-Year Life... 3.7 Million Elderly Working Despite Receiving Pension

Statistics Korea "Average Life Expectancy 83.5 Years, Healthy Life Expectancy 66.3 Years"
As of May 2022, 3.703 Million People Aged 55-79 Receiving Pension and Working
46.7% Increase Since 2017... Elderly Poverty Rate 40.4%, Highest Among OECD Countries

Members of the Korea Retirees Association held a press conference near the Presidential Office in Yongsan-gu, Seoul, on the afternoon of the 15th of last month, opposing the reduction of public senior job programs reflected in the 2023 budget and urging the expansion of job opportunities in response to the increasing elderly population. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] As the average lifespan of the population increases along with the period spent suffering from illnesses, a rapid rise has been observed in the number of elderly people who continue to earn money for their livelihood despite receiving pensions after retirement. This indicates that the issue is not just a temporary 'income cliff' after retirement, but an increasing number of elderly individuals worry about financial matters until the end of their lives. This supports the analysis that as the cost of supporting the elderly within the working-age population rises, the nation's productive capacity inevitably declines.

On the 2nd, the Federation of Korean Industries (FKI) released the results of a survey titled "Status of the Elderly Population Aged 55-79 and Their Employment Conditions," based on Statistics Korea data from 2017 to 2022. According to the FKI, as of May this year, among pension recipients aged 55-79, 3,703,000 people continued working, which is a 46.7% increase from 2,524,000 in May 2017. The proportion of those working among pension recipients aged 55-79 was 49.7%, up 5.9 percentage points from 43.8% five years ago.

With the increasing proportion of the elderly population, the FKI views the major problem as the decline in national productivity if these individuals fail to achieve economic independence by securing quality jobs. The issue lies in the fact that pension benefits received by the elderly are insufficient to guarantee economic independence, and the poverty rate among the elderly is steadily rising.

First, according to the FKI, as of May this year, the average monthly pension amount?including national and basic pensions as well as private pensions?was 1.38 million KRW for a two-person household. This is only about 64% of the 2.16 million KRW monthly "minimum living expenses after retirement" reported in the Household Finance and Welfare Survey released by Statistics Korea at the end of last year. The missing 36% must be supplemented by earning income through work. According to Statistics Korea, 68.5% of people aged 55-79 responded that they "wish to continue working in the future," with 57.1% citing "to supplement living expenses" as the overwhelming reason.

Consequently, there has been a surge in elderly self-employed individuals running businesses such as chicken restaurants without any employees. As of last year, among self-employed persons aged 60 and above, 87.2% were classified as so-called "solo proprietors." The number of "solo proprietors" aged 60 and above reached 1,685,000 last year, a 22.9% increase from 1,371,000 in 2017.

The FKI pointed out that the elderly poverty rate is high and national productivity is declining. According to the FKI, Korea's elderly poverty rate was 40.4% in 2020, the highest among 37 OECD member countries surveyed. This was 2.8 times the average rate of 14.3%. Looking at the elderly dependency ratio, which indicates the number of elderly people to be supported per 100 working-age individuals, it is projected to surge to 24.6% this year, 31.8% in 2026, and 90.4% in 2060. Although this year's figure is lower than the OECD average of 28.1%, it is expected to exceed the average of 30.7% in 2026. By 2060, it is anticipated to be double the average of 45.2%.

According to the OECD, Korea's population aged 65 and over is projected to account for 17.5% of the total in 2022. It is estimated to surpass 20% in 2025, entering the "super-aged society" category. Korea is expected to take seven years to transition from an "aged society," where the elderly make up 14% of the population, to a "super-aged society," the fastest pace among the 37 OECD countries surveyed. This is faster than Japan, the world's fastest aging country, which took 11 years, and the United States, which took 15 years.

Ultimately, the FKI diagnoses that the fundamental solution is to ease regulations so that companies can create quality jobs. Choo Kwang-ho, head of the FKI Economic Headquarters, emphasized, "To expand the foundation for retirement income, it is necessary to secure the financial sustainability of public pensions and activate private pensions through enhanced tax benefits. At the same time, it is important to create a 'business-friendly environment' by flexibilizing rigid labor regulations and reducing tax burdens to expand quality job opportunities."

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