‘Punishing workers for getting old': how South Korea's wage system impoverishes the elderly

The Guardian

09-07-2025

G Young Soo started working at an insurance company at 23 and spent more than three decades climbing the ranks to become branch director. Now, approaching his 60th birthday, Young Soo's employer has systematically stripped away his salary.
As part of South Korea's 'peak wage' system, Young Soo's wages were cut by 20% when he turned 56, and by a further 10% each year after that. By the time he is forced to retire next year, he will earn just 52% of what he made at 55, despite the same workload and hours.
'It is not justified,' he said, calling the practice age-based 'discrimination'.
For D Young Sook, 59, a nurse facing mandatory retirement after 36 years, the prospect fills her with anxiety.
'I can't imagine myself being out of this organisation,' she said. 'It would feel like standing by myself on a windy road.'
Young Soo and Young Sook (not their real names) are among dozens of workers interviewed for a Human Rights Watch (HRW) report published on Wednesday, which reveals how employment policies are used in South Korea to push older workers into lower-paid, more precarious work.
The study found that South Korea's employment laws force millions to retire at 60, slashing their salaries by up to half in preceding years through a 'peak wage' system.
While companies can choose whether to set a retirement age, 95% of firms with more than 300 employees do, according to the labour ministry, typically choosing the age of 60, affecting 3.1 million workers. Smaller companies are less likely to set retirement ages due to labour shortages.
The peak wage system was designed to use the savings from cutting older workers' pay to hire younger employees in a bid to boost productivity.
Instead, the policies have contributed to one of the highest elderly poverty rates among developed nations, with 38% of over 65s living below the poverty line. Workers over 60 earn 29% less on average than younger colleagues, with nearly 70% in insecure employment.
Bridget Sleap, the report's author, said these measures were designed to protect workers but instead do the opposite.
'They deny older workers the opportunity to continue working in their main jobs, pay them less, and push them into lower-paid, precarious work, all just because of their age.
'The government should stop punishing workers for getting older.'
The findings come as South Korea grapples with growing pressure to increase the retirement age, creating a heated societal debate.
The country faces the world's lowest birthrate alongside a rapidly ageing population, creating mounting economic pressures. The national pension fund, one of the world's largest, faces potential depletion within decades without major reform.
President Lee Jae Myung pledged during his electoral campaign to gradually raise the mandatory retirement age to 65, closing the five-year gap before pension eligibility.
The proposal has gained institutional backing, with a government advisory panel and the human rights commission also recommending the change.
But the initiative has triggered fierce resistance from younger workers who fear it will limit their job prospects and lower productivity.
Research suggests the concern is misplaced with studies in South Korea showing that ageing is not associated with lower work productivity.
But simply raising the retirement age could worsen discrimination, legal experts warn.
Labour lawyer Kim Ki-duk argues the proposed reform misses the point.
'The retirement system itself is problematic,' Kim told the Guardian. 'Simply raising the retirement age to 65 would give companies more years to apply discriminatory wage cuts under the current system.'
Rather than extending mandatory retirement, Kim argues the entire system should be scrapped. His position puts him at odds with major labour unions, who have been pushing for age extensions rather than abolishing mandatory retirement altogether.
'Workers should be able to continue as long as they can perform their duties,' he said.
Mandatory retirement at any age violates international human rights law and should be eliminated entirely, says HRW.
Under international treaties that South Korea has signed, any employment decisions based on agemust be justified as necessary and proportionate.
Reflecting on his colleagues who opted for early retirement rather than endure wage cuts, G Young Soo said it took grit to push against the grain.
'We needed a lot of courage to choose to work until the age of 60.'