Severe Poverty Problem Among Elders in South Korea
By admin March 9, 2018

In South Korea, 14 percent of its 51 million people are expected to be 65 or older at the end of 2017, and this figure is expected to reach 40.1 percent by 2060. Unbelievably, 49.6 percent of the elderly in South Korea live in poverty, which is the highest among OECD countries. A survey conducted by the Hankyoreh newspaper revealed that only 7.9 percent of retired seniors describe their living expenses as “comfortable,” 41.7 percent rated them as “inadequate” and 20.4 percent as “extremely inadequate.” Extensive and severe poverty problems come with further consequences. In South Korea, on average, 29.1 people per 100,000 committed suicide in 2012, 2.5 times the OECD average rate of 11.9 per 100,000. This already dreadful figure skyrocketed to 81.8 per 100,000 for elderly citizens aged 74 or below and 160 out of 100,000 for citizens aged 75 and above. Not surprisingly, economic troubles were the most common reason for committing suicide, cited at 44.1 percent (Case Study 2017). There is no doubt that this is an emergent public problem that needs to be addressed immediately. The poverty problem among senior citizens is established when relatively young and underdeveloped social security and pension systems fail to cover the needs of the fast growing aging population in the modern society.


Numerous researchers have demonstrated that senior citizens’ earning falls off dramatically after retirement. This reduction in income is mainly caused by two factors: mandatory contractual retirement and lack of support from the pension system.

Mandatory Contractual Retirement

First, the retirement policies and patterns in South Korea are different from those in other OECD countries. One of these distinctive policies is the mandatory contractual retirement, which demands retirement from employees at certain ages – 65 for university professors, 61 for teachers, 60 for civil servants, lower in the public sector, and even lower in the manufacturing sector  (Case Study 2017). In some industries, workers are even forced to retire years before their contractual retirement age. As a result, a great number of Korean workers were compelled to leave their job when they were in their 50s or 60s, losing their single largest source of income. Theoretically, senior citizens can acquire earnings from other channels such as the National Pension Scheme (NPS) or family members. However, these methods are either unreachable or insufficient.

Lack of support from pension system

The single largest pension system in South Korea is the NPS, which was first introduced in 1988 and covered 19.89 million insured persons as of December 2011. However, a UN report demonstrates that for citizens aged 60 or above the NPS enrollment rate was only 36.3 percent, leaving 63.7 percent uninsured (ESCAP Report n.d.).


Further, due to its recent establishment, the NPS does not provide any support for many senior citizens. In addition, many poor elderly people are not eligible to take advantage of the National Basic Livelihood Security System because they have working-age children, even though their children do not or could not support them (Case Study 2017). Losing their monthly income could result in their living situations turning detrimental if these elderly cannot generate earnings from elsewhere.


Fortunately, enrollment rates look relatively optimistic for people in their 50s. However, even for these insured people, life could be hard after retirement. A low net pension replacement rate of 45.2 percent (2012) will not ease the poverty problem. A 45.2 percent rate means that the amount of money a worker receives from the pension fund is less than half of his or her income. By contrast, the International Labor Organization suggests a net replacement of 70 percent to 80 percent to ensure financial sustainability after retirement.

Low quality jobs

Since the NPS fails to provide sufficient support for senior citizens, many of them try to find a new job after retirement in order to better support themselves. However, reentering the labor market might not provide adequate support either. Another Hankyoreh research shows that a total of 56.5 percent of elderly workers are classified as low-wage, with 37.1 percent earning below minimum wage — rates two to three times higher than the respective percentages of 21.4 percent and 11.6 percent for all workers. Among elderly female workers, in particular, over seven out of ten (71.6%) earn low wages, while nearly half (46.6%) make less than minimum wage (Case Study 2017). This data clearly expounds that even if senior citizens who need financial support do find a job after retirement, they are highly likely to remain in the poverty class.

Lack of support from government and society

For many elders in the poverty class, the government and family members are the two remaining sources of financial support.


Though the government is aware of the problem, its reaction has been rather sluggish. The 2012 OECD Economy Survey noted that public spending for old-age benefits in South Korea was only 1.6 percent of its GDP in 2007. Moreover, data from the Ministry of Budgeting and Finance also exposes that only 0.26 percent of the 2014 national budget was allocated for services and income for senior citizens. The Korean government has established the Basic Old-Age Pension to cope with the NPS enrollment issue, and this Old-Age Pension covers 70 percent of elderly citizens who are 65 and older. However, Basic Old-Age Pension, on average, only provides insured people a monthly payment of KRW 200,000, which is inadequate to cover the minimum cost of living – which was KRW 617,000 a month in 2015 (Case Study 2017).


Family members, especially children, are supposed to take care of elders in a Confucian society. This self-consist cycle, where parents raise children carefully in exchange of children’s care when the parents get old, lasts for a long time in South Korea. However, due to urbanization and modernization this tradition is quickly vanishing. A greater portion of the younger generation are migrating to the cities and creating nuclear families, a type of family that only contains parents and children and segregates older generations voluntarily or involuntarily. According to the Korean Census report, one in three Korean seniors lives alone (Case Study 2017). Moreover, many senior citizens who fail to get support from their children are generally unwilling or reluctant to apply for aid since many do not want to be stigmatized by peers, which is exacerbating the elderly poverty problem throughout South Korea.


For more information

Bloomberg. Gender Inequality Is a Risk for South Korea’s Workforce. 7 4, 2017.


CNBC. For S.Korea’s $430 billion pension giant, looking bad is the problem. 10 21, 2015.


ESCAP Report. Income Security for Older Persons in the Republic of Korea. ESCAP,SDD.


IZA. The labor market in South Korea, 2000–2016. 2016.


Reuters. S.Korea’s pension fund says to raise overseas investment to 40 pct by 2022. 5 25, 2017.

Thanks for sharing !

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