South Korea’s wage system exposes injustice against elderly workers

Department of Research, Studies and International News 10-07-2025

As South Korea continues to discuss raising its mandatory retirement age, a deeper crisis lies beneath the surface, one not of when employees retire, but of how they are treated in the years leading up to it. A recent report by Human Rights Watch (HRW) reveals that South Korea’s so-called “peak wage” policy is systematically impoverishing older workers, stripping them of income and dignity as they approach retirement.

For decades, workers like G. Young Soo have devoted their lives to their companies. After beginning his career in insurance at 23, Young Soo rose through the ranks to become a branch director. Yet, as he nears 60, his dedication is being repaid with sharp pay cuts. Under the “peak wage” model, his salary dropped by 20% at age 56, with an additional 10% slashed each subsequent year. By the time he retires next year, he will be earning just over half of what he made at 55, despite working the same hours and shouldering the same responsibilities.

“It is not justified,” he said, calling the policy blatant age-based discrimination.

For 59-year-old nurse D. Young Sook, forced retirement looms like a cliff’s edge. After 36 years of dedicated service, she faces being pushed out of her job. “It would feel like standing by myself on a windy road,” she confided.

These stories are not isolated. They reflect a nationwide practice that disproportionately penalizes older workers while masquerading as a productivity-boosting policy. Although the “peak wage” system was initially intended to free up resources to hire younger employees, the result has been far more destructive: older employees are pushed into precarious, low-paying jobs or into premature retirement, with no meaningful social safety net to catch them.

South Korea’s labor laws permit companies to set their own retirement ages, and 95% of large firms have chosen the age of 60. This practice affects more than 3 million workers. While smaller businesses are less likely to set fixed retirement ages due to labor shortages, the impact on the broader workforce is stark.

According to HRW’s findings, the majority of workers over 60 earn 29% less than their younger counterparts, and nearly 70% are employed in unstable positions. This has contributed to an alarming statistic: over 38% of South Koreans aged 65 and above live below the poverty line, giving the country one of the highest elderly poverty rates in the industrialized world.

Bridget Sleap, author of the HRW report, condemned the system’s failure: “They deny older workers the opportunity to continue in their primary jobs, reduce their income, and force them into instability, all based on age alone. The government must stop penalizing people for aging.”

The report’s release comes at a pivotal moment, as South Korea grapples with an unprecedented demographic crisis. With the lowest birthrate in the world and a rapidly aging population, there are growing calls to raise the retirement age to 65. President Lee Jae Myung has pledged to address the issue by narrowing the gap between retirement and pension eligibility.

Yet, this solution might only deepen the problem. Critics warn that without reforming the discriminatory wage system, extending the retirement age could simply allow corporations more years to underpay older workers. Labor attorney Kim Ki-duk argues that raising the retirement age without dismantling the peak wage system is fundamentally flawed. “What we need is not just a later retirement date, but an end to the entire structure of forced retirement and age-based wage cuts,” he said.

Kim’s position challenges both corporate and union orthodoxy. While major labor unions advocate for extending retirement, Kim and others believe that true equity means giving workers the right to remain employed as long as they can perform their jobs, regardless of age.

From an international law perspective, South Korea’s practices also raise serious questions. HRW stresses that mandatory retirement violates global human rights standards, which require that any age-based employment decisions be justified by necessity and proportionality. South Korea, as a signatory to several international labor treaties, is failing to uphold these principles.

For workers like G. Young Soo, who chose to stay and work until 60 rather than leave early under financial pressure, the cost is both personal and symbolic. “It took courage to resist the tide and stay in the job,” he reflected.

While Washington and its allies often preach about human rights, they remain silent about the capitalist structures that grind down the elderly in so-called democratic allies like South Korea. The U.S.-backed system in Seoul prioritizes corporate profit over human dignity, exposing the hypocrisy of Western human rights narratives.

As South Korea moves forward with its retirement age debate, the real question remains unanswered: will the country address the root causes of age-based injustice, or continue punishing its elders for simply growing old?