[Start Economy] "100 Million Childbirth Incentives" Chairman's Proposal to Raise the Elderly Age to 75

■ Host: Anchor Lee Jung-seop, Anchor Cho Ye-jin
■ Starring: Professor Heo Jun-young of Sogang University's Department of Economics

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information. Please specify [YTN News START] when quoting.

[Anchor]
We deliver the economic news quickly and kindly. Start Economy, today we will be with Professor Heo Jun-young of Sogang University's Department of Economics. Welcome, professor. In our society, the pace of low birth rate and aging is also very fast, so what private sector has suggested raising the age of the elderly to 75 for now?

[Heo Joon-young]
Lee Jung-geun, chairman of Booyoung Group, who was newly inaugurated as the chairman of the Korean Senior Citizens' Association, said that yesterday. In fact, from the perspective of the welfare of the elderly and from various perspectives, the poverty rate for the elderly is very high in Korea, and many people are worried when they think about the national age. For example, I retire at the age of 60, and the national pension comes from the age of 65, so many people are worried about what if there is an income gap in the middle. From a personal point of view, I think it would be meaningful to have this discussion. Considering the background of this discussion, the working-age population in Korea is usually 15 to 64 years old. The year 2018 was the peak. It's been decreasing since then. Right now, it's a little over 60%. It's slightly higher than the global average. According to this estimate, the global average remains at 60%, but in Korea, it falls to 45%. So, I think it can be a serious problem because only about 45% of the population is included in production. As of 2070, one working-age population should support 0.18 elderly people, so it seems to be a problem worth discussing from various social perspectives.

[Anchor]
They proposed not only raising the age of the elderly, but also extending the retirement age so that the elderly can actually remain at work?

[Heo Joon-young]
That's right. So let's create a population department now to provide birth support and welfare support for the elderly. And there are currently financial resources used by the government for various welfare of the elderly, and it is said that it will be in 30 to 40 trillion years. I think they approach these things in a way that allows them to work and pays wages. For example, when the retirement age reaches 65, why don't we take only 40% of the peak wage and sequentially lower wages and make them receive about 20% compared to the peak wage when they reach the age of 75. This is an extension of the wage peak system. These things have a very important meaning. Recent studies show that it is good to increase the employment of the elderly population, but this can have the effect of reducing youth employment as companies increase the burden of labor costs. These things are said to be much more serious in the private sector than in the public sector, where youth employment is mandatory. In that respect, we usually say that demons have details. Then, the measures that can be done without affecting youth employment. I think it's about ways to increase employment for the elderly.

[Anchor]
As you mentioned earlier, there are many concerns about the production population. So, if we give birth to a child now, the production population will be incorporated in about 20 years. As low birth rates still continue, Chairman Lee Jung-geun became a talker by giving 100 million won to one child in Booyoung Group before.

[Heo Joon-young]
Since February of this year, employees with children born after 2021 have received more than 7 billion won and 60 beneficiaries, 100 million won per person. And if you think about what kind of issues were these, there was an issue where the recipients had to pay income tax. So, why don't Chairman Lee Jung-geun actually do something like a donation tax exemption system for maternity money? So, the Ministry of Economy and Finance is actually embarking on the revision of the income tax law. In this respect, I think there are a lot of parts where we can't give birth because of career breaks or burdensome parts that cost too much to raise a child.
Isn't that a company's starting point for that? I think we need to think about these from a social point of view.

[Anchor]
I wonder what the public's response to such a proposal is. Apart from this, is there a real case of an extended retirement age in government departments?

[Heo Joon-young]
The Ministry of Public Administration and Security actually includes about 2,300 sanitation workers and facility managers, not public servants. These are not public servants, but they can continue to work until their retirement age as indefinite contract workers. They have decided to increase their retirement age to 65 by gradually increasing it according to their birth age. And as I said earlier that there is a possibility that it may spread to other government departments as a pilot case, I think it is very important to be a public sector. In the public sector, about 3% of youth employment is mandatory and it is reflected in management evaluation. Then, when youth employment has not decreased significantly, it seems to be a sufficient system to think about the employment of the elderly through the extension of the retirement age.

[Anchor]
I hope it will spread widely, starting with the Ministry of Public Administration and Security. After the next topic, two weeks before the U.S. presidential election, Korean companies will be very interested in the tariff policies of the two candidates.

[Heo Joon-young]
Recently, the Chamber of Commerce and Industry surveyed 300 domestic companies and there is an election next week, and there is a lot of uncertainty after the election. Moreover, it continued to be on the news today, but it was so close that I researched what implications companies were having and what concerns they were having, and I think the biggest concern is about tariffs. In the case of candidate Trump, universal mutual tariffs are expanded. This is a tariff that will be added to the existing tariff, so I think I'm worried about the fact that when products exported from Korea exceed US land, the price will become expensive and price competitiveness will disappear. In the case of Harris, there was something interesting recently. Harris served as vice president in the Biden administration, so I think the Biden administration will continue. What I did recently was I blocked a little bit about exporting from China, and I did things like steel. In a way that China exports to Mexico and bypasses it. Mexico has agreements in Mexico, Canada, and the United States. That's why you can get some tariff benefits. So what the U.S. has done recently is that it will see who owns the company and the nationality of the major shareholders who own more than 50% of the company in the future. So in the end, Harris also seems to be concerned about these things where the strategy is different, but tariffs are an issue overall, because there's a possibility that they're going to hit China in this aspect and then they're going to hit other countries, including China.

[Anchor]
If we continue to look at the impact of the U.S. presidential election on our economy, both of them plan to expand the U.S. fiscal deficit in addition to tariff policies, and I wonder how this will affect our economy.

[Heo Joon-young]
As you know well, in the case of Trump, it's about continuing to lower the tax rate, lowering the corporate tax and lowering the highest income tax rate anyway. Then I'm sure I'm out of money. They're saying they'll fill some of the gaps in their finances with tariffs. I can't fill it perfectly. Then, if a country has too much money to spend and less tax, what to do is issue government bonds. Isn't U.S. Treasury the safest asset in the world? Then you might think that there is always demand for government bonds, but there may still be financing problems. In the case of Harris, the recent policy announcements are that we will provide support to companies that sell houses to people who are new to housing or something. He will do something about companies so that they can catch inflation. Or they say they will expand tax incentives for children, but there is still no specific financing plan. So, from the market perspective, no matter who the two candidates are, there is a possibility that more U.S. government bonds will be released in the future, and if a lot of government bonds are released, government bond prices will fall, and we think government bond prices and interest rates will move in the opposite direction. The interest rate on government bonds is bound to rise. So it's true that even though the U.S. actually went into a rate cut and made a big cut, there are concerns about whether interest rates will fall quickly in the future, such as 10-year Treasury bonds. Last time Trump was elected in the first term, the U.S. 10-year Treasury bond rate jumped over the next 30 years. The market is aware of that.

[Anchor]
The market moves in advance because it's shelving. If you look at the supporters, the political culture in our country is different, so we didn't have public support from celebrities or the business community, but Elon Musk separately supports Trump and Taylor Swift also supports the Democratic Party.

[Heo Joon-young]
If you look at history, it started in the 1920s when President Warring Hard was in office. It's a very old story and the most historically famous example of Frank Sinatra is a very interesting story of how he turned to Reagan in the 1940s after campaigning for Democratic candidates like President Roosevelt and President Kennedy, and has since shown a forward-looking attitude in support of the Republican Party. It's the American talk show king in 2007, and Oprah Winfrey's support for President Obama is very famous. Traditionally, Hollywood and tech-forms are a bit Democratic. So actually after that, when Hillary ran, George Clooney and a lot of movie stars applied. But recently, Trump and Harris are very supporters divided. In the case of candidate Trump, as you said, it feels like Elon Musk has taken the lead. Taylor Swift has a high profile in our country.Ma is not very popular.Ma is a female singer who is called the best pop artist of the present era in the United States. He's publicly expressing his support for Harris, but he has a slightly different view on this. The different view is that this will work very well, but in the opposite view, it is unlikely that those who do not support Trump or those who do not support Harris will suddenly support Harris, but there seems to be such a story among existing supporters that they can play a role in encouraging voting or increasing participation.

[Anchor]
Regardless of the results, it seems that the U.S. presidential election has many things to see because they are not seen in Korean political culture. The last topic is going to be the New York Stock Exchange overnight. It closed mixed.

[Heo Joon-young]
Dow and S&P fell a little bit. In particular, only the Nasdaq rose, and even within the Nasdaq, technology stocks did not all rise. As you mentioned earlier, Nvidia has risen, and there is a performance announcement, but there seems to be a prediction in the market that the performance announcement will come out well. The rest of the techforms were weak, and the Philadelphia Semiconductor Index rose slightly and ended, and the reason itself is that the U.S. rate cut is unlikely to be faster than expected anyway. Because the U.S. economy is solid, consumption is solid, and jobs are solid. These things seem to be a little bit of a limitation in the market. If you look at the exchange rate in Korea recently, the atmosphere in which the exchange rate is rising again seems to be affected by the U.S. monetary policy.

[Anchor]
I see. We looked at the New York Stock Exchange today. So far, I was with Professor Heo Jun-young of Sogang University's Department of Economics. Thank you for talking today.