Solutions for a Super-Aged Society: Freedom to Work by Ability, Not Age Limits

The mandatory retirement age system has long been accepted in our society as a matter of common sense. The notion that one must stop working upon reaching a certain age is even glorified under the name of “retirement.” But viewed coldly, the mandatory retirement system is a form of age discrimination that legally restricts the “freedom to work.” A system that excludes people from the workplace based solely on age, rather than individual ability and willingness, is incompatible with the basic principles of a liberal society.

The reality of an era of ultra-low birthrates and super-aging clearly makes older workers’ participation in the labor force unavoidable, but responding with legislation to “raise the retirement age to 65” is not a fundamental solution. On the contrary, it risks increasing the burden on businesses, reducing opportunities for young people, and making the labor market even more rigid.

◆ Raising the retirement age expands labor market duality and deprives young people of opportunities rather than protecting older workers

Multiple studies have already confirmed that each time an extension of the retirement age is implemented, employment among older workers rises while hiring of younger workers declines. The KDI pointed out that after the mandatory retirement age of 60 was introduced, every increase of one older worker was associated with a decrease of 0.2 young workers, and the Bank of Korea estimated that number could be as high as 1.5. When the retirement age of 60 was introduced in 2016, the benefits were concentrated mainly among older regular employees at large corporations, while small and medium-sized enterprises and young people lost opportunities accordingly.

At the heart of the problem is a seniority-based wage system that is disconnected from labor productivity. In fact, according to estimates by the Korea Enterprises Federation, extending the retirement age to 65 would result in an additional 30 trillion won in labor costs within five years. This burden would inevitably lead to reduced hiring of young workers, accelerated investment in automation, and the relocation of production bases overseas.

The direct beneficiaries of a higher statutory retirement age would mainly be regular workers at large corporations. By contrast, workers at SMEs, non-regular workers, specially employed and platform workers, and the self-employed are in blind spots outside retirement age regulations and are therefore unlikely to benefit. As a result, disparities and conflict could deepen even among “older workers” themselves, and the dual structure of the labor market could become even more entrenched.

◆ The mandatory retirement system is “controlling employment by age”; post-retirement rehiring is more rational

Raising the retirement age does not “preserve” jobs; it merely extends administrative intervention that “controls employment by age.” There is a misconception that abolishing the retirement age would make everyone more insecure, but what is actually needed is to broaden the institutional pathways that allow people to work again after retirement based on their abilities.

Rather than extending the retirement age, a “post-retirement rehiring system” is a more rational alternative. Many countries in Japan and Europe already guarantee work opportunities for older employees through continued employment systems instead of a statutory retirement age. This allows firms to select and rehire workers based on job duties and performance, minimizing intergenerational competition for jobs. It is a way to protect the “freedom to work” while preserving market efficiency.

◆ Rather than extending the retirement age, reforming the wage system and improving productivity should come first

What is needed now is not a question of “age,” but a question of “work.” As long as the seniority-based wage system remains in place, debates over the retirement age will inevitably end in greater burdens for businesses and conflict between generations. A shift to an ability-based wage system is necessary to create sustainability in the labor market. Expanding job- and performance-based pay is not merely an adjustment of the wage structure; it signifies a transition to a productivity-centered society.

◆ The solution in a super-aged era is not a higher retirement age, but the “freedom to work to the full extent of one’s abilities regardless of age”

In other words, if compensation is determined according to one’s capabilities regardless of age, older workers will be able to continue working longer as their experience and skills are evaluated in the market, companies will be able to manage labor costs rationally, and young people will be given more fair job opportunities. This is the freest and most market-friendly solution in a super-aged era.

Gwang yong Go

Policy Director, Center for Free Enterprise (CFE)

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Original title: 초고령화 시대 해법, 나이 제한 아닌 능력껏 일할 자유

Author: Gwang yong Go

Date: 2025-11-13

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=28257