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Inflation, lack of children's support and pension: reasons why more Korean retirees work, says BOK

Headquarters of the Bank of Korea in Seoul (Yonhap)
Headquarters of the Bank of Korea in Seoul (Yonhap)
SEJONG -- The number of seniors engaging in economic activities has increased, seemingly due to their worsened living conditions involving lower-than-expected annuity income as well as reduced cash support from their children, a central bank report showed Monday.

According to an analysis on factors of rising employment rate among seniors from the Bank of Korea, the tally for employed people aged 60 or over increased by 2.66 million during the period of 2010-2021.

This made up 82 percent of the total increase of 3.24 million among all adults over the corresponding period.

While seniors legally refer to those aged 65 and over, the report is considered to have classified those aged between 60-64 as de facto seniors in consideration of the ordinary retirement age of 60 in the nation.

The report said the employment rate for all adults inched up 1.6 percentage points to 60.5 percent, stressing that the figure for seniors surged by 6.7 percentage points from 36.2 percent in 2010 to 42.9 percent in 2021.

“Despite low-quality jobs including low-level payments for seniors, their participation in economic activities have sharply increased,” it said.

It pointed to declining cash support from their children, against a higher burden for living expenses.

About 76 percent of seniors received 2.51 million won ($1,764) per annum on average from their children in 2008. By contrast, 65.2 percent of the group aged 60 and over were supported with only 2.07 million won in 2020.

However, seniors’ living expenses for groceries and housing increased by 29.2 percent during the 2012-2021 period, which far outstripped the 7.6 percent growth in the living expense burden for all adults.

Seniors’ annuity income was also found to have fallen short of the growth in their living expenses. The portion of income from public pensions, including the National Pension Service, out of the living expenses per capita decreased from 62.9 percent in 2008 to 59.6 percent in 2020.

The report showed that the extent of pensions’ contribution to seniors' living expenses were quite low compared to the average of the Organization for Economic Cooperation and Development.

Given the declining number of people in the working age population, seniors’ employment could be favorable, the report said. But it stated that they should refrain from forcing themselves to work despite worsening health conditions.

“(The government) should expand expenditure on social welfare as well as increase the state payment level of the basic pension,” it said.

By Kim Yon-se (kys@heraldcorp.com)

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