At a soup kitchen in Dongdaemun, a district of Seoul synonymous with the capital’s fashionistas, Kim Mi-kyung is busy preparing for the lunch rush. Ms Kim explains that the kitchen serves around 500 people a day, most of them elderly. “They can’t work, they can’t ask for money from their children and they can’t eat,” she says. “So they come here.”

South Korea has the second-highest rate of income poverty among the elderly in the oecd, a club of mostly rich countries (the highest is tiny Estonia). Nearly 40% of South Koreans over 65 live below the oecd’s poverty line, set at half the national median income. In Japan that rate is 20%. The oecd average is 14%. South Korea’s and Japan’s abundance of old people and lack of young ones, combined with changing labour markets and inflexible pension systems, mean the problem is likely to worsen. Other rich countries will soon face similar issues. East Asia provides an example of what works—and what doesn’t.

A South Korean on the oecd’s poverty line earns almost $22,000. That is still more than an average salary in Mexico. And this does not take into account asset wealth such as property. Still, in South Korea 63% of income-poor seniors have few assets. And Japan’s and South Korea’s pension systems are flawed.

Japan’s system dates from 1961 and has long offered wide coverage. South Korea’s was introduced in 1988, and only reached nearly universal coverage in 1999. Japan has a two-tiered pension system. The first is a basic tier, available to all, with flat-rate payments and a final payout proportional to years of contribution. The second is for those in full-time employment. Workers’ contributions, based on their earnings, are matched by their employer. The South Korean system is similar, with all but the top-earning 30% entitled to the basic old-age pension. In 2022 it amounted to 307,500 won ($220) per month. Workers in good jobs often have private pensions, too.

Those who enjoyed a long career of regular work retire with a relatively decent pay packet. But basic pensions on their own are rather stingy. In Japan a full 40 years’ worth of contributions garners a pension of around 65,000 yen per month ($410). And freelancers are less likely to make consistent contributions to their pension, or even to be enrolled. One estimate suggests that the top 10% of South Korean earners born in 1970 will retire with almost 34 years’ worth of contributions, while the bottom 10% will have only 19.

chart: the economist

A second problem is that both counties do terribly on gender equality. Women earn less and are more likely to be in precarious employment. This means that older women are especially likely to be poor (see chart). Japan’s pension system was designed for a traditional family model headed by a salaryman and a stay-at-home mother. So-called dependent spouses are exempted from making contributions if they earn less than 1.3m yen. Even so, they receive the basic pension, so married couples receive a larger pension than an individual worker. Divorcees are hit hard.

Rising life-expectancies have led to longer working lives. Some 49% of South Koreans aged 65 to 69 are still working, second only in the oecd to Japan’s 50%. Working life for older people in Japan is not perfect, but much thought has gone into making their jobs useful and rewarding. Nearly 40% of Japanese companies keep employees on beyond 70, and each municipality runs a “Silver Work” centre where older people can find jobs. Miyata Toyotsugu, a 77-year-old widower, has worked at a bicycle park in the east of Tokyo for 12 years. “Without my job,” he says, “I will lose all my ties.”

Silver surfers

South Korea’s approach is more haphazard, and old people often find themselves in low-paid, unappealing work. This is worsened by a culture of putting pressure on people to retire from their main career early, so that companies can save on pension contributions and benefits by paying a one-off lump sum. Only 25% of South Korean workers aged between 55 and 59 in 2020 had the same employer as they had five years earlier, compared with 52% on average in the oecd. The pyejijupnun halmeoni, or cardboard-collecting grandmas, are a ubiquitous symbol of this precarity, dragging carts overloaded with used boxes to sell for a pittance. Lee Young-ja, now 78 years old, has been at it for ten years. Rent and hospital bills eat through her meagre earnings and what she gets from the state.

chart: the economist

Old-age poverty will only get worse. Japan is the world’s oldest society; 30% of the population is over the age of 65. South Korea has half that share. But it is rapidly catching up (see chart). In 1960 South Korea’s fertility rate was six births per woman. Now it has fallen to 0.78, the world’s lowest. Japan is more fecund, at 1.3, but still far below the replacement rate, at which the population is stable.

This worsening ratio of workers to pensioners is putting strain on systems. South Korea’s pension fund grew to be the world’s third largest, worth over 1,000trn won ($730bn), because few qualified for a full pension until now. As the baby-boomers retire with a full working life’s worth of contributions, and too few workers pay in, that nest-egg will quickly vanish. The government estimates that the fund will stop growing by 2040. By 2055, it will be empty.

Some simple tweaks would help. South Korea is raising its retirement age from 62 to 65, and Japanese companies are now encouraged to keep workers employed until 70. South Koreans pay only 4.5% of their income into their pensions, which is matched by their employers. The oecd average is more than double that. And both countries could eliminate regressive features of their systems. Japan’s pension scheme increasingly relies on consumption taxes rather than income tax, which would raise more from higher earners. Tackling low fertility rates would also help. But mass immigration, a simple solution to the shortage of young people, remains taboo in both countries.

Politicians must figure out how to convince people that working life is not a race to retirement but an invigorating climb followed by a gentle descent. Japan and South Korea, both famed for their love of hiking, have already begun that transition, with mixed success. ■

(http://www.autoadmit.com/thread.php?thread_id=5527802&forum_id=2#47655509)

(NYUUG: A falling birthrate is GREAT!)

(http://www.autoadmit.com/thread.php?thread_id=5527802&forum_id=2#47655552)

Guy posting from a first world country here, 'sup?

(http://www.autoadmit.com/thread.php?thread_id=5527802&forum_id=2#47655554)

gotcha

(http://www.autoadmit.com/thread.php?thread_id=5527802&forum_id=2#47657128)

BANGARANG!

Date: May 13th, 2024 5:28 AM

Author: nyuug (Gangnam WGWAG Playboy)

stuffwhitepeoplelike: losing their shit over a JUST KIDDING KIMSTER sea breeze and aging

(http://www.autoadmit.com/thread.php?thread_id=5527802&forum_id=2#47657195)