[Start Economy] "Working" Old Age vs "Just Resting" Young Man..."Extended full-time." Is my voice getting louder?

■ Host: Anchor Lee Jung-seop, Anchor Cho Ye-jin
■ Starring: Professor Seok Byung-hoon, Department of Economics at Ewha Womans University

* 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 latest economic news quickly and kindly. Start Economy, today we will be joined by Seok Byung-hoon, professor of economics at Ewha Womans University. Welcome, professor. Looking at employment statistics by age group, it was confirmed that the number of employed people aged 60 or older surpassed those in their 50s for the first time. What does this mean?

[Seok Byung Hoon]
This is because the demographic structure has changed and the participation of the population aged 60 or older in economic activities has expanded. According to the National Statistical Office's September employment trend, the number of employed people aged 60 or older reached an all-time high of 6,749,000. Originally, 60 is the legal retirement age. It means no longer retiring and staying in the labor market and working even when you're over 60 years old. And the proportion of employed people over the age of 60 also ranked first in all age groups with 23.4%. So, one out of four employed people is over 60 years old. The proportion of employed people aged 60 and over has also increased by about four times in 42 years. So as of July 1982, it was only 6%. Now that it is 23.4%, it is the result of rapid aging.

[Anchor]
The number of employed people itself is important, but especially in what areas have you increased a lot and the quality of employment such as employment type seems to be important, what do you think?

[Seok Byung-hoon]
In terms of the quality of employment, it turns out that it's not that high. In particular, the number of employed people in the health and welfare industries and manufacturing industries increased. In the case of the health and welfare industry, many elderly women were employed. In particular, there were many types of employment because the demand for employment in the care sector increased a lot. Next, in the case of men, the quality of employment itself was not high because men aged 60 or older were employed as non-regular workers in the form of inventory after retirement from the manufacturing industry. In addition, there were many cases of starting a business when they were not able to get a job. Therefore, the number of startups for the elderly also increased by 15% to 13,000 as of July.

[Anchor]
The so-called commission seems to be very prominent in society, but there is a saying that next year or the year after, the elderly population will exceed 20% and become a super-aged society. Then these trends will be faster or the percentage will increase.

[Seok Byung Hoon]
I think this phenomenon is inevitable. For example, there is a concept of a working-age population. In terms of age, the age group population between the ages of 15 and 64 is considered the working-age population, because this working-age population is rapidly decreasing due to aging. As of 2022, the productive population was 36.74 million. By 2040, it is expected to decrease by 21%. Then, because the average life expectancy increases, the proportion of the elderly continues to increase in the economy, and as the employment of the elderly increases, the elderly will have no choice but to replace the labor force of the young people.

[Anchor]
In this background, the standard of the elderly, that is, the age of the elderly, is about 65 years old. There was a discussion to raise it to 75 years old, right?

[Seok Byung Hoon]
That's right. This is the proposal of the new president of the Korea Senior Citizens' Association. The law stipulates that the elderly are from the age of 65, so they receive a basic pension when they turn 65. Public transportation fees are also receiving various welfare benefits, including discounts on route preferential treatment, and we proposed to raise the age of the 65-year-old to 75 over 10 years. Instead of giving up these welfare benefits, he suggested introducing a wage peak system to make the elderly work if they want to work for 40 percent of their highest wages, for example, at the age of 65, and to make them work if they want to work even at the age of 75, even if they want to work for only 20 percent, to solve the social labor shortage and reduce welfare spending.

[Anchor]
Now, the low birth rate aging phenomenon is getting worse, the number of elderly people working is increasing, and the number of young people working is decreasing. If this happens, I think we will have no choice but to worry about a labor gap. What do you think about the case of a drop in productivity or power in the labor market now?

[Seok Byung Hoon]
I think there is a high possibility of that. Because according to a survey by the National Statistical Office, the number of young people aged between 15 and 29 who answered that they just rested was 442,000, up 18.5% year-on-year, the largest increase in 44 months. Not only is the youth population plunging, but young people are not even actively participating in the labor market. On the other hand, as the proportion of the elderly is increasing, their participation in the labor market is increasing. But what's important here is that no matter how much the number of workers increases or is maintained, it's not important. The labor productivity of workers is a problem that cannot be ignored. However, because Korea's current wage system maintains a wage system such as seniority and salary system, the elderly have higher experience in the labor market than young people, while labor productivity is questioned whether they meet that high wage level. So, given this, labor productivity tends to stagnate as more and more young people take a break without gaining experience in the labor market. On the other hand, the elderly believe that if the wage structure does not change the form of the contract, Korea's potential growth rate, which continues to receive high wages and productivity cannot keep up with it, will inevitably decline.

[Anchor]
You pointed out the problem of high wages and productivity. If the standard for the elderly is raised socially, if it is agreed to raise the standard for the elderly to 75, there will be a voice that the retirement age should also be raised according to the age. Then, is there any problem or concern that may arise here?

[Seok Byung Hoon]
There are two biggest problems. The first is that there could be fewer jobs for young people. In the past, when the retirement age was mandatory at 60 and the retirement age in the labor market was 60, full-time wage work between the ages of 23 and 27 decreased by 25%. In other words, there is an alternative effect that replaces the youth with the labor force of the elderly. So the first problem is that the number of jobs for young people decreases. Next, the burden of labor costs in the management of companies can be too large. So it will be a problem that management problems can occur. This is because of the rigidity of the labor market in Korea. As I said earlier, the wage structure is rigidly determined by the seniority and salary system, so if the retirement age of the elderly is extended collectively, productivity will inevitably fall, but the burden of labor costs will inevitably increase from the perspective of companies as more elderly workers have to pay low productivity and high wages.

[Anchor]
In line with the rapidly changing demographic structure, I think awareness and institutional improvement should also be supported. Let's look at another statistic. The proportion of regular workers has decreased for the first time in three years, and the wage gap between regular and non-regular workers has been the largest ever?

[Seok Byung Hoon]
That's right. The proportion of regular workers has decreased in three years. Among wage workers, the standard for non-regular workers reached 38%, ranking second all-time. There are 8.46 million non-regular workers. About 1 in 4 wage workers are non-regular workers. Naturally, as the number of non-regular workers itself increases, the wage gap between regular and non-regular workers has contributed to the largest gap ever, with a difference of 1.75 million won.

[Anchor]
Even in the face of such a widening wage gap, the reason for choosing non-regular workers has increased the number of voluntary reasons. What's the background?

[Seok Byung Hoon]
It seems that the working culture is changing. Therefore, there is an interpretation that a culture that prefers to work as long as you want at the time you want is being established. As the anchor pointed out earlier, 66.6% of non-regular workers decided to become non-regular workers due to voluntary reasons. Next, about 60% of the voluntary reasons are that they are satisfied with working conditions, so it seems that the pattern of labor contracts in the labor market is changing in a way that prefers the type of employment of non-regular workers who work only for the time they want.

[Anchor]
Also, I'll ask you this because you keep saying that the labor market and Korea's potential growth rate are related. The IMF released a forecast for Korea's economic growth rate of 2.5%. It's the same number compared to last July.

[Seok Byung Hoon]
That's right. Korea's economic growth forecast was maintained at 2.5%, which is the same as the July forecast. It is almost the same level as predicted by various domestic and foreign institutions. So, most institutions such as the Bank of Korea, the government, KDI, and OECD have released forecasts in the 2.4-2.6% range, which is the same. The most important thing is Korea's potential growth rate and the potential growth rate, which can be said to be the basic physical strength of the Korean economy, which is 2%. 5% is higher than the potential growth rate, which shows that the Korean economy is not in a recession.

[Anchor]
There are countries that are the same, there are countries that have risen, and there are many different countries. Moving on to the next topic, I'm telling you that oil prices are on the rise these days. It seems that various concerns have emerged, perhaps because of the situation in the Middle East. The government continues to cut oil taxes, so I think I'll have to think about whether to return to square one.

[Seok Byung Hoon]
I think we need to go back to square one. I've already expressed a lot of those opinions through interviews and things like that. It's for two reasons. The reason why the oil tax rate began to be cut in the first place was to reduce the burden on ordinary people due to high prices and high oil prices. However, in the case of last month, the consumer inflation rate reached 1.6%, falling short of the Bank of Korea's price stabilization target of 2%, so prices have stabilized downward. Therefore, the justification for lowering oil taxes with the aim of stabilizing prices has disappeared. Then, as the oil tax is continuously reduced, it is the transportation energy environment tax, which includes the oil tax, and there is a large tax deficit in the transportation energy environment tax. Re-estimation shows that transportation energy environment tax revenue will decrease by 4.1 trillion won from the original budget this year. This year's estimated tax deficit is 29.6 trillion won, which is close to 14%, and it will be a tax deficit from the reduction in oil taxes. Considering these tax deficits and stabilized prices, it is said that oil tax cuts should no longer be made. In past cases, if the government ends the oil tax cut rapidly, it is likely to end it in stages because it will have a large impact on the economy of the common people. So in the case of diesel, since there are many types of livelihoods, we will gradually lower the reduction from gasoline.

[Anchor]
The government will also have a lot of worries. There must be a lot of concerns about lack of tax revenue, so let's wait and see what decisions we will make. What do you predict if the oil tax rate is reduced to its original state?

[Seok Byung Hoon]
Currently, the oil tax is 20% for gasoline at the original tax rate, which is 164 won. Then, diesel is reduced by 30% and 174 won. So, if you return it to the original state, the price of gasoline will rise to 164 won per liter, and then it is expected to soar to 1,700 won per liter.

[Anchor]
Finally, let's look at the New York Stock Exchange. I think it was mixed.

[Seok Byung Hoon]
The New York Stock Exchange closed mixed. Only the Nasdaq edged up 0.18%, while the Dow Jones and S&P 500 edged lower. The main reason is that U.S. government bond rates are soaring. There are two reasons why interest rates on government bonds are soaring. The first is that the U.S. economy is so good, contrary to what you think. So, the number of recently announced retail sales has also increased compared to the previous month. However, in the case of the United States, consumption accounts for about two-thirds of the total GDP because the domestic market is large. So the pace of the Fed's policy rate cut will be slower than market forecasts, suggesting that GDP growth will be robust because retail sales are a breaking point for retail. Reflecting this, interest rates on government bonds are rising. Another thing is that former U.S. President Donald Trump's chances of winning the presidential election are increasing, so if former U.S. President Donald Trump wins the presidential election, the promised tariff hikes and policies to curb immigration will be realized. Then, because labor costs rise and import prices rise, high prices continue, so this is also expected to slow the pace of the Fed's policy rate cut, and for these two reasons, the New York Stock Exchange is now flat.

[Anchor]
We've even looked at the New York Stock Exchange. That's all for today. So far, I was with Seok Byung-hoon, a professor of economics at Ewha Womans University. Thank you very much.