|Retirement Age enacted: “Act on Prohibition of Age Discrimination in Employment and Aged Employment Promotion”
1. Reasons for revision
Since first becoming an aging society in 2000, Korea has aged faster than any other country. It is expected that the aged population (65 years old or older) will increase to 14% of the total population by 2018, and then to 23.3% by 2030, which will categorize Korea as a super-aging society, with one out of every four people being aged. In particular, beginning in 2017 the number of economically active people (15 ~ 65 years old) will decrease, and by 2030 the major work force (people aged 25 ~ 49 years of age) is expected to decrease to less than 50% of the total, which will have a shocking effect on the Korean labor market.
However, the current law stipulates: “When an employer sets a retirement age, he/she shall endeavor to set it at 60 years of age or above.” Workplaces with 300 workers or more have an average retirement age of 57.2, which is when workers have to give up work. With this in mind, the purpose of this revision is to require all companies to set their retirement age at 60 years or older, and take the necessary measures to revise their wage system etc. in accordance with the extension of the retirement age. The effective date will vary in accordance with the size of the workplace.
2. Comparison between Previous and Revised Act (Revised on April 30, 2013)
Article 19 (Retirement Age)
When an employer sets a retirement age, he/she shall endeavor to set it at 60 years of age or above.
Article 19 (Retirement Age)
① When an employer sets a retirement age, he/she shall set it at 60 years of age or above.
② Regardless of Subparagraph ①, in cases where the employer has previously set a retirement age at less than 60 years of age, his/her retirement age policy shall be regarded as having been set at 60 years of age.
Article 19-2 (Changing Wage System, etc. due to Extension of Retirement Age)
1. The employer of a business or workplace who extends the retirement age in accordance with Subparagraph ① of Article 19, and the labor union which is formed by the majority of all workers (or to a person representing the majority of all workers if such a labor union does not exist) shall take the necessary steps to revise the wage system, etc. according to the conditions of the business or workplace concerned.
2. The Minister of Labor and Employment may provide necessary support (such as an employment support subsidy, etc., in accordance with the Presidential Decree) to an employer or the employees of a business or workplace that has implemented the necessary measures in accordance with Subparagraph ①.
3. The Minister of Labor and Employment may provide necessary support (such as consultation to revise wage structures, etc., in accordance with the Presidential Decree) to an employer or the employees of a business or workplace which extends the retirement age to 60 years of age or above.
This Act shall enter into force one year from the date of enforcement of its promulgation. Provided, that the revised rules of Article 19, Paragraphs ① and ② of Article 19-2 shall enter into force in accordance with the following:
1. Businesses or workplaces with 300 full-time workers or more; public institutes in accordance with Article 4 of the Act regarding the Operations of Public Institutes; local public enterprises and local corporations under Articles 49 and 76 of the Local Public Enterprises Act: January 1, 2016.
2. Businesses or workplaces with less than 300 workers, state and local governments: January 1, 2017.