Retirement not an Option for the Elderly in Korea

Gareth MorganInvesting

Gareth Morgan, Director of Gareth Morgan Investments

I'm just back from two weeks in South Korea, an economy described by its own press as being in recession, with GDP growing at a paltry 4% rather than the 7% to which they've become accustomed. Still the consensus is that it's a temporary lull only and within the year the economy will be back performing more acceptably. They'll need all the growth they can get because the economic challenge facing the country when unification with the North eventually occurs, is immense. It makes the task Germany faced look a breeze. North Korea has about half the population and a standard of living about one tenth, that of the South.

Talk to Koreans about their objectives as a nation and some of the responses are a little surprising. Three goals are repeatedly mentioned. Obviously unification is high on the priorities, but is followed by economic superiority over Japan, and then for quite a proportion, military dominance over Japan – most surprising because it's a particularly strong sentiment amongst the young, who weren't around during the years of Japanese oppression. But given the vast numbers of young men dressed in army regalia manning roadblocks, coastal observation points, and patrolling through even country villages, it becomes obvious why. This is a country still very much at war (it's just not fighting any engagements at present) and all the activity associated with that fact, instils in everybody a sharp appreciation of the country's history of successive conquests by the Japanese and Chinese. "Never again" is the general consensus.

One cannot help but notice the difference in the strength of the Korean national consensus to objectives to say any national objectives as espoused in New Zealand. Our relatively 'easy go lucky' disposition may be the result of higher average living standards, geographical isolation, or lack of any direct military threat, or a combination of all three, but the relative lack of focus certainly makes one wonder how long we will maintain any economic superiority over the emerging Asian nations.

While we must clearly be thankful for our detachment from any immediate military threat, the intense focus on economic improvement in Korea itself provides a contrast. This is evident not only at a policy level, but prevalent with individual households as well where focus on both education and enterprise is intense. Unemployment is virtually an unknown concept in Korea as the enterprise, self-reliant culture is predominant.

Compulsory superannuation is not a policy employed in Korea. Indeed the whole concept of retirement there is slightly different to put it mildly. Older people work rather than stop work. They still have leisure time of course but it is not a permanent or enforced state as it is prone to be in New Zealand. Indeed in the Korean National Parks, the majority of trampers or hikers are the older people who show a resilience to the most demanding of tracks which I've yet to see elsewhere. It's not unusual to complete a 1000 metre climb over a couple of hours (and the National Parks are awesome) and find at the summit, elderly folk some on sticks who have likewise conquered the challenge. This fitness is a little humbling but there is great national pride in the capability of the elderly. Their value to the nation is evident in the economic sphere. Farming (which engages 13% of the population) predominantly employs older people as does retailing, at least outside of Seoul. Childcare is an activity heavily shouldered by older citizens.

The ongoing engagement of the elderly in productive economic activity, in conjunction with the strong base of family support makes the concept of superannuation superfluous. The externalities wrought by this economic participation of the elderly include their relatively strong physical (and probably mental) condition, lessening their demands on the national health resources.

Certainly South Korea which is now an economic powerhouse, can provide a few salutary lessons to New Zealand. The country of course faces ongoing economic problems in terms of international competitiveness, the drain on economic returns from maintaining a massive military, and meeting the exponentially rising expectations of a younger generation exposed to Western culture. But there are aspects of its economy which New Zealand can learn from. Most striking is the full inclusion of its elderly in productive endeavour and the anathema of putting them out to pasture thereby condemning them to be a burden to taxpayers.

Retirement not an Option for the Elderly in Korea was last modified: December 15th, 2015 by Gareth Morgan
About the Author

Gareth Morgan

Facebook Twitter

Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.