Rapidly Aging Society – Time to Overhaul Social Security System for Elderly – South Korea

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South Korea has taken a step closer toward being an “aged society” amid a rapid increase in the number of senior citizens. According to the National Statistical Office (NSO), the number of people aged 65 or older stands at 5.01 million as of July, accounting for 10.3 percent of the nation’s 48 million population. The pace of the aging phenomenon is breathtaking.

An alarm bell already rang in 2000 when South Korea was labeled an “aging society” with the elderly population surpassing the 7-percent mark. More worrisome is that the country is predicted to become an aged society in 2018 with the ratio soaring to 14 percent. Furthermore, the NSO said the population of senior citizens is expected to reach 10 million, or 20 percent of the nation’s total population by 2026.

This means that the nation will emerge as an “ultra-aged society” in 18 years. Coupled with a falling birthrate, this stunning demographic change is likely to have a wide-ranging impact on every aspect of Korean society. The birthrate was estimated at 1.26 last year, up from a record low of 1.08 in 2005. But it still remains at the world’s lowest levels. From a long-term perspective, the nation’s population will inevitably decline.

What’s problematic is that the country will suffer from a fall in the economically active population aged between 15 and 64, especially teenagers and those in their 20s and 30s. This could lead to a fall in the nation’s competitiveness in terms of economic power. Besides, younger people will be forced to take up the heavy burden of supporting senior citizens. Currently, every seven out of the economically active population support a senior citizen. But an average 4.6 people are predicted to support each senior citizen in 2020.

It is apparent that the nation’s present social security system will not be able to meet skyrocketing costs for the rapidly aging population in the future. The Nation Pension Fund for salaried workers and the self-employed is forecast to dry up in 2060, although the government decided last year to cut pension benefits by 33 percent. Senior citizens’ medical spending is expected to total 11 trillion won this year, occupying 30 percent of the country’s total medical expenditure. The sum is likely to snowball to 87 trillion won in 2030, representing 50 percent of total medical bills.

Now is the time to overhaul the two pillars of the social security system: the pension scheme and national health insurance. There are growing concerns about the potential collapse of the system. Thus, the government should push social security reform for the long-term to help senior citizens lead decent lives. One of the best ways is to create jobs for the elderly. According to the NSO, the average retirement age of South Korean workers is estimated at 53.

Considering that the average life expectancy of Koreans is 79 years, retirees have to spend the rest of their lives without work. This is no doubt a great loss not only to the elderly but also to the nation. It is regrettable that the Lee Myung-bak administration has given the impression that it is putting less weight on the aging and birthrate issues than the previous government did. Marking the International Day of Older Persons on Oct. 1, we stress the importance of the issues.

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