Poverty worsening among South Korea's aged people

opinion July 09, 2012 00:00

By The Korea Herald

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Alarm bells have been sounding continuously against worsening poverty among aged people in South Korea.


A review of concrete figures showing the depth of the problem should add to the urgency of working out measures to help ease increasing difficulties facing elderly South Koreans.
The average income of elderly households was only 66.7 per cent of the average family income in Korea last year, according to statistics from the Organisation for Economic Cooperation and Development.
The proportion was the second lowest among the 30 OECD member states surveyed, with Ireland at the bottom with 65.9 per cent. The OECD average stood at 82.4 per cent.
Nearly half of Koreans aged 65 or older lived on income below the median per capita income, with their poverty rate the highest in the OECD.
The insecure livelihood of elderly Koreans is also proven by government figures showing that less than a third of them benefit from the public pension system.
According to the OECD statistics, elderly Koreans relied on pensions for a mere 15.2 per cent of their income. Earned income accounted for nearly 60 per cent of their total income, nearly three times as much as the OECD average at 21.4 per cent.
This income composition was in sharp contrast to those in other Western advanced countries. In France, for example, a large part (87.6 per cent) of income for senior citizens came from the pension system, with the proportion of earned income remaining at a meagre 6.4 per cent.
Poorly backed by the social safety net, elderly Koreans are driven into working the longest among OECD member states.
An average Korean man completely quit working at the age of 70.3 in 2009, compared to 69.7 in Japan, 65.5 in the US, 64.3 in the UK and 59.1 in France.
Many aged Koreans are ill prepared for post-retirement life, as they have spent most of their income and savings on the education and weddings of their children.
The younger age group is not much better in preparing for elderly life.
In a recent survey of 2,000 people born between 1955 and 1974, nearly 40 per cent said they have made no preparation for post-retirement years, while estimating an average 2.43 million won (Bt68,500) per month to be needed to support their livelihood.
Time is running out to address elderly poverty in a full-scale manner, considering the rapid ageing of Korean society.
The ratio of people aged 65 or older, which stood at 11 per cent of the entire population in 2010, is projected to rise to 15.7 per cent in 2020, 24.4 per cent in 2030 and 38.2 per cent in 2050.
Comprehensive measures should be drawn up and implemented in a consistent way to prevent elderly Koreans from being driven further into the corner.
Reflecting their hard life, 77 per 100,000 senior Koreans committed suicide in 2009, with the rate being the highest among OECD member states.
A two-pronged approach seems to be needed to increase job opportunities and strengthen the social safety net for the elderly.
Helping more senior citizens stay at work is essential to preventing the burden of supporting aged people from holding down economic growth. A peak wage system needs to be introduced at more workplaces to extend the retirement age for their employees.
A study estimated that if the government programme to expand work for aged people was fully implemented, it would lead to reducing the elderly poverty rate by more than 6 percentage points.
What is immediately needed for the more vulnerable group appears to be to increase the subsidy granted to poor elderly people, which is currently set at a mere 94,600 won per month.
Korea certainly has some room to increase welfare expenditure, considering its current spending accounts for 9 per cent of gross domestic product, far below the OECD average at 19 per cent.
Aside from expanding the budget, what may be more needed is to adjust the priority list of benefit programmes, cutting back on spending on populist measures including free day care for children from all families, which have been introduced out of political considerations.