No easy retirement in South Korea

Familiar worries hound S. Korea's retirees
The Straits Times, 27 Oct 2014

SEOUL - Out of work and out of pocket, South Korean retirees are struggling to force their way back into an unwelcoming job market in an effort to supplement meagre or non-existent pensions.

But President Park Geun Hye's vision of a new "creative economy" seems to have little space for a generation that grew up with shipyards and steel mills rather than smartphones and start-ups.

Mr Kim Min Su, 69, receives a monthly pension of 590,000 won (S$715) - the sole income for him and his wife.

But the former head engineer said he needs a minimum of two million won a month for living expenses.

Recently, he was introduced to a small company which offered to take him on full time for 1.2 million won.

"They basically said, 'You're old. Take it or leave it'," he said.

Mr Kim is better off than many, in that he has a little pension and help from his children.

South Korea introduced a national pension system only in 1988, and just around a third of people aged 65 or older actually receive one.

Many more joined the pension scheme at the tail end of their careers and receive very small sums.

Close to 50 per cent of South Koreans over the age of 65 live in "relative poverty" - meaning their monthly income is less than 50 per cent that of the average household income, according to state data agency Statistics Korea.

President Park had promised to give every senior citizen over 65 a 200,000 won monthly stipend, but reneged on the commitment last year, saying the economic situation would not allow it.

Retirement can come early in South Korea, with many companies pushing staff out in their early- or mid-50s.

Most of those staff have no option but to look for work elsewhere - which is hard to come by, especially for those above 65.

Like a large number of retirees, Mr Kim Yong Sik, 71, tried to go into business for himself. The venture folded three years later.

According to Statistics Korea, half of all self-employed small-business owners are now over the age of 50.

There are now more than 43,000 fried chicken outlets across South Korea, most of them opened by the elderly, and the intense competition means more than half of the new arrivals will go out of business within three years.

"The struggling owners of these businesses are one of the biggest structural problems in our economy," Finance Minister Choi Kyung Hwan said last month, noting that many are left destitute when their business collapses.

The government does provide new skills training in areas such as computer Web design, but many find such courses inappropriate for their age.

"Nobody is going to hire somebody my age for that kind of work," said retiree Kim Yong Sik.

In an effort to keep more people working for longer, legislation was passed in April that would ensure no worker - effective from 2016 - would be obliged to retire before 60.

And in May, the government, the employers' confederation and unions signed a pact encouraging companies to adopt a wage-peak system which would allow workers to stay on longer but at a salary that is steadily trimmed over time.

AGENCE FRANCE-PRESSE