South Korea's 'peak wage' system, which systematically cuts salaries for older workers approaching mandatory retirement at 60, is criticized by a Human Rights Watch report for causing age-based discrimination and contributing to one of the highest elderly poverty rates among developed nations. The system is under scrutiny as the country debates raising the retirement age amid demographic challenges.
‘Punishing workers for getting old’: how South Korea’s wage system impoverishes the elderly
South KoreaEmployment lawAsia PacificAgeing
AI Summary
TL;DR: Key points with love ❤️South Korea's 'peak wage' system, which systematically cuts salaries for older workers approaching mandatory retirement at 60, is criticized by a Human Rights Watch report for causing age-based discrimination and contributing to one of the highest elderly poverty rates among developed nations. The system is under scrutiny as the country debates raising the retirement age amid demographic challenges.
Trending- 1 Wednesday: Human Rights Watch (HRW) report published
- High elderly poverty rate (38% of over 65s living below poverty line)
- Workers over 60 earn 29% less on average than younger colleagues
- Nearly 70% of older workers are in insecure employment
- Societal debate over increasing the retirement age
- Potential depletion of the national pension fund without major reform
- Violation of international human rights law (according to HRW)
What: South Korea's 'peak wage' system systematically cuts the salaries of older workers as they approach mandatory retirement, leading to high rates of elderly poverty and age-based discrimination.
When: Ongoing issue, with a Human Rights Watch report published on Wednesday. Published: 2025-07-09T01:08:09+00:00
Where: South Korea.
Why: The 'peak wage' system was designed to use savings from cutting older workers' pay to hire younger employees and boost productivity. However, it has instead led to impoverishment and precarious work for the elderly.
How: Companies, particularly those with over 300 employees, typically enforce mandatory retirement at age 60. Under the 'peak wage' system, wages are cut by a percentage (e.g., 20% at 56, then 10% annually) in the years leading up to retirement.