“Korea with the fastest aging rate…the oldest poverty rate is also No. 1 in OECD”

It was found that the rate of increase in the elderly population in Korea was the fastest among the member countries of the Organization for Economic Cooperation and Development (OECD). It is predicted that it will become the oldest country among OECD countries by 2048. In addition, it is pointed out that the poverty rate for the elderly is also the highest among OECD member countries, and measures are urgently needed.

On the 17th, the Korea Economic Research Institute (Kyung-Yeon Han) announced the results of analyzing the current aging status and countermeasures in five major countries (G5) including the United States, the United Kingdom, Germany, France, and Japan. According to this, from 2011 to last year, the number of elderly people aged 65 or older in Korea increased by 4.4% per year on average. In the last 10 years, the number of elderly people has increased by 290,000 each year. Korea’s aging rate is 1.7 times the OECD average (2.6%), the fastest among these countries.

Currently, the ratio of the elderly population in Korea is 15.7%, ranking 29th out of 37 OECD countries. However, if it is the current trend, 20 years later, 2041, 33.4%, one of the three will become the elderly. By 2048, the elderly aged 65 and over account for 37.4% of the total population, making it the oldest country among OECD countries.

Elderly poverty rate, highest among OECD

While the proportion of the elderly population is rapidly increasing, compared to other countries, the economic difficulties of the elderly in Korea are relatively large. According to Han Kyung-yeon, Korea’s elderly poverty rate (43.4%) was the highest among OECD countries in 2018. This is about three times the OECD average (14.8%).

“Korea’s elderly poverty rate is overwhelmingly high compared to G5 countries such as the United States (23.1%), Japan (19.6%), the United Kingdom (14.9%), Germany (10.2%), and France (4.1%).” “The elderly in our country are very poor and the aging rate is unprecedented in the world,” he said.

It is pointed out that the cause of aging and poverty in the elderly is the rigidity of the labor market. As regulations on the dispatch and fixed-term system are strengthened and the cost of dismissal is high, there is no room for companies to use a variety of manpower and flexibly adjust manpower. It is pointed out that the difficulty of finding jobs for young people in the long term leads to the problem of low birthrate, which intensifies the aging population, and that the difficulty of finding jobs in old age leads to poverty for the elderly.

Sung Tae-yoon, a professor of economics at Yonsei University, said, “It is difficult for companies to increase employment due to increased labor costs and labor rigidity due to recent institutional changes. “It is done.”

Lee Sang-ho, head of the employment policy team, Han Kyung-yeon, says that the rigidity of the labor market is the cause of deteriorating the employment environment for the elderly. “The G5 countries allow dispatch to most industries, including manufacturing. The period of dispatch and fixed-term system is also unlimited in three countries except Germany and France,” he said.

Han Kyung-yeon suggested strengthening the pension function as a solution to the poverty problem of the elderly. According to Han Kyung-yeon, the replacement rate for public and private pensions in Korea in 2018 was 43.4%. This means that even if the private pension such as the retirement pension and personal pension and the public pension such as the national pension and the public employee pension are combined, the average income before retirement is less than half. On the other hand, in the case of G5 countries such as the United States, the average replacement rate for pensions is 69.6%.

Han Gyeong-yeon analyzed that G5 countries had the effect of conserving their income only by receiving pensions thanks to the activation of private pension subscriptions through tax benefits. In these countries, the rate of tax support for private pensions was 29.0% on average as of 2018. In the United States, this rate reaches 41.0%. As a result, in the G5 countries, the private pension enrollment rate of the 15-64 year olds is relatively high at 54.3%.

On the other hand, in Korea, the private pension tax support rate was 20.0% and the subscription rate was only 16.9%. Chief executive Chu said, “Instead of inducing private pension enrollment, major countries have strengthened financial soundness by operating public pensions in a form of’pay more and receive later’ than Korea.” “Korea also strengthened support for private pensions and “We need to improve efficiency so that the citizens can expand their income base after retirement.”

Reporter Kim Kyung-mi [email protected]