SEOUL—For new South Korean President Park Geun-hye, who in her inauguration speech promised a fairer society, one of the biggest challenges will be to tackle a growing income gap that has seen almost one in two elderly South Koreans slip back into poverty.
Ms. Park in her speech on Monday alluded to tougher economic times ahead, talking about a new chapter in the economic miracle that lifted many South Koreans out of poverty in the decades of breakneck growth after the Korean War—but deepened inequalities.
An elderly woman is assisted in casting her ballot in the presidential election in Nonsan, south of Seoul on Dec. 19. Reuters
The economic polarization of South Korean society—a major theme of the election that brought Ms. Park to power—is most extreme between the young and old. Traditionally, older Koreans have relied on the support of their families in retirement. The nation has the lowest savings rate in Asia as Koreans prioritize large immediate costs such as education. But multigenerational family structures have become less common as the country modernized and the elderly increasingly have to fend for themselves.
Yoo Jung-nam, 72 years old and a former soldier, works as a day laborer on construction sites in Seoul in order to get by.
"I get 150,000 won ($138) a month from the veterans' fund from the government. I use the money for travel and to buy something to eat; then it's all gone. I can hardly make ends meet even with what I earn from construction work," he said. He said his children are struggling with how to make their own living and can't afford to support him financially.
South Korea ranks last among the 30 members of the Organization for Economic Cooperation and Development in terms of the poverty rate among senior citizens. In 2011, the latest data available, the rate—the percentage of people aged 65 and over living with less than 50% of median equivalent household income-—stood at 45.1%. That compares with the OECD average of 13.5% and is up from 42% six years ago.
The average retirement age in South Korea is 57. Those who have contributed to the National Service Pension Fund, usually former salaried workers, now start receiving a monthly pension at age 61. The outgoing government said in December that it sees the need to raise the retirement age but proposed no concrete steps. Some state-run and private think tanks recently proposed the government raise the age for pensions to 68.
Ms. Park's plan for how to tackle low incomes among the elderly is a new means-tested "National Happiness Pension" to be introduced in July 2014, which will supplement the existing state pension. Under the new plan, every citizen age 65 or above will get from 40,000 won to 200,000 won a month, depending on their income level. In comparison, the current basic state pension plan for the elderly of 94,000 won is only for those with no other sources of income. The government will also provide free medical services for four major age-related diseases such as cancer.
The plan is controversial. The new administration estimates the new subsidy will cost around 40 trillion won over the next five years. While South Korea's state finances are generally healthy, with a debt-to-GDP ratio at a low 33.4%, outgoing government officials such as Finance Minister Bahk Jae-wan have cautioned that fiscal sustainability would be seriously compromised by extravagant welfare-related spending.
South Korea also faces the challenge of one of the world's lowest birthrates, which will increase the burden on the younger generation to fund pension payments. The government more than doubled the budget for measures to lift the birthrate—such as subsidies for child care and parental leave—to 50 trillion won for the 2011-15 period.
Vice Finance Minister Shin Je-yoon said this month the country is now facing the challenge of a generational conflict, which he called a "social malaise" after the country's rapid industrialization in the wake of the 1950-53 Korean War.
Analysts said the new administration will face serious challenges and President Park will need to show deft economic management to improve conditions for the elderly while maintaining the country's fiscal health.
"I just hope the new welfare program won't spend heavily and yet not achieve its intended goals," said Yoon Hee-sook, a researcher at the Korea Development Institute, a state-run think tank.
The National Pension Service, which provides the existing state pension, had assets of about 392 trillion won at the end of 2012. Some private think tanks project that under current demographics trends its assets will peak in 2043 and then decline before being depleted by 2060.
That leaves the younger generation concerned about their own retirement plans.
"Older people want a reward for their contribution to the nation's growth in past decades. But it's not fair for younger people to shoulder so much of the financial burden. That's discouraging," said Oh Won-moon, 30, a salaried worker at a retail business.
"It might be unavoidable that young people like me won't start receiving our pensions until later, and will get a much lower one, if national pension funds runs down or runs out."
http://online.wsj.com/news/articles/SB10001424127887323384604578328042416306434
Neglect of elderly citizens a chart topper that South Korea could do without
Global Times | 2013-1-22 23:08:01
By Park Gayoung
There are some fields in which South Korea tops the world. From smart phones and girl bands to shipbuilding, South Korea's influence is way out of proportion to its small population of 50 million. But South Korea also tops some less laudable rankings, and when viewed together, shows an aging society that's leaving its older residents out in the cold.
As of 2011, South Korea was No.1 among Organization of Economic Cooperation and Development (OECD) countries in terms of percentage of citizens aged between 65 and 69 who are still working.
A surprising 41 percent of these retirement-age citizens are still laboring away. That's more than double the average of 18.5 percent throughout the 32 OECD member nations.
Less than a decade ago, creating more jobs for seniors was a major media issue. However, not many decent jobs have been created for seniors since then, and as of 2011, the effective retirement age outstripped the notoriously senescent Japan, which has already been classified as the world's oldest country.
The effective age of retirement for South Koreans was 71.4 for men and 69.9 for women, second only to Mexico among OECD members. Among the 27 OECD countries reviewed, South Korea is the only country whose retirement age is higher now than it was 40 years ago.
It's not as though this generation of South Koreans hasn't been through enough already. They were born in a war-torn, extremely poor country, went through unpleasant working conditions, and - another No.1 - have the longest work hours per week among OECD nations.
But having to work isn't the worst fate awaiting South Koreans entering their golden years.
The poverty rate among people of over 66 is highest among OECD members at 45 percent. Almost half of South Koreans living in poverty are over 65.
With life after retirement looking so bleak, it's not surprising that South Korea tops yet another ranking - elderly suicide.
Among those aged 75 and above, 160 out of 100,000 people killed themselves in 2010, eight times higher than the average for OECD countries. And the number for elderly citizens between 65 and 74 was 81.8 per 100,000 in the same year - also No. 1 in the OECD.
There are many reasons for this situation, but not many clear solutions.
South Korea only adopted a national pension scheme in 1988. As a result, elderly citizens are not well prepared for life after retirement.
And multiple financial downturns starting with the Asian financial crisis in 1997 have not helped the situation. The savings of the elderly were spent on their children and themselves amid the economic downturns.
This problem might get even more serious with the retirement of the baby boomers just around the corner.
Considering South Korea is not the only aging country in the world, topping these charts indicates that some missteps have been taken and also a lack of attention to the crucial issues regarding senior citizens.
The outgoing President Lee Myung-bak said in his New Year's greeting, "We will be the first to put the crisis behind us and step into the shining light that awaits us beyond this dark tunnel."
Lee's optimistic words, however, mean little when you look at the reality of life for South Korea's elderly.
The gloomy number ones that South Korea holds probably means there is no shining light waiting for South Koreans at the end of their long, hard-earned tunnel.
The author is a reporter with the Global Times. gayoungpark@globaltimes.com.cn
http://www.globaltimes.cn/content/757507.shtml
No Country for South Korea’s Old
“For S. Korea’s old, a return to poverty as Confucian filial piety weakens”
Washington Post article also says the percentage of children who think
they should look after their parents has shrunk from 90 to 37 in just 15-yrs.
“There’s a dark side to South Korea’s 50-year rise to riches: The graying generation that is most responsible for that ascent is living in relative poverty.”
The disturbing piece, titled “For South Korea’s old, a return to poverty as Confucian filial piety weakens,” written by Chico Harlan, was published in The Washington Post recently. He says, in short, that what Koreans call “Hyodo” is something of the past.
Some of the points he made were downright brutal and shocking –“In a fast-paced nation famous for its high achievers and its big spending on private tutors and luxury goods, half of South Korea’s elderly are poor, the highest rate in the industrialized world,” he wrote.
The article also brought up the fact that over the past 15 years, the percentage of children who think they should look after their parents has shrunk from 90 percent to 37 percent, according to government polls. And the elderly suicide rate has more than tripled since 2000.
One retiree in Seoul, Park Jang-su was quoted as saying, “The family has crumbled. That’s why we are dying alone.”
Following is the link to the Washington Post article.
South Korea's rapid economic rise leaves many of its elderly facing poverty
There is a dark side to South Korea's 50-year rise to riches: The greying generation that is most responsible for that ascent is living in relativepoverty.
In a fast-paced nation famous for its high achievers and its big spending on private tutors and luxury goods, half of South Korea's elderly are poor, the highest rate in the industrialised world.
Some live in crumbling hillside neighbourhoods that lack running water. Others wait in line at soup kitchens where there is no young face in sight. The worst-off comb through garbage, collecting cardboard and paper and lugging it to rubbish dumps, where they can receive several dollars for a pile. It's common in central Seoul to see elderly people gathering scraps.
Most of South Korea's ageing poor were comfortable or even prosperous during their careers, experts say. But they have tumbled backwards since retirement, victims of a tumultuous change in the way this nation treats its old.
In much of Asia, a powerful Confucian social contract has for centuries dictated that children care for their ageing parents. But that filial piety is weakening as younger generations migrate to cities. The change is particularly noteworthy in South Korea, because it has accumulated wealth so quickly and its society is so notoriously cut-throat, with ruthless competition for the best test scores and more prestigious jobs.
"It's almost like people don't have the psychological space to care for other people," said Lee Sun-young, an administrator at a senior centre in the Seodaemun district of Seoul.
Over the past 15 years, the percentage of children who think they should look after their parents has shrunk from 90% to 37%, according to government polls.
Meanwhile, South Korea's government has been slow to provide a safety net. Only a third of retirees have pensions, and the payouts are relatively paltry, analysts say.
"The family has crumbled," said one retiree in Seoul, Park Jang-su. "That's why we are dying alone."
Increasingly, the mix of neglect and weak government support is turning deadly. South Korea's elderly suicide rate has more than trebled since 2000, a surge that has occurred despite counselling and awareness programmes funded by local governments. At the senior centre in Seodaemun, a district where some 9,000 elderly people live alone, three staffers run a suicide hotline. They take about 30 calls per day. Ten workers go door to door through Seodaemun, trying to find and help those who are "dangerously isolated," said Lee, the administrator.
On a recent round, Yang Yun-kyeong, 24, one of the staffers, packed her car with several boxes of flavoured milk, a foam carton of kimchi and a sack of sticky rice. Over the afternoon, she visited seven homes, making deliveries to those either too ill or poor to buy the goods.
One visit led her to a darkened apartment building with cracked windows and Xs painted on the doors. The building had been condemned, but five units were occupied. One belonged to Lee Yeong-sun, 82, who lives with his wife, who is suffering from dementia.
Lee welcomed Yang inside and invited her to sit down. His floor was covered with quilts and heated only by an electric blanket. The apartment smelled of mould.
Lee had served in the Korean war and worked a variety of odd jobs in the following decades. He doesn't have a pension. He lives on roughly $300 per month, he said – payments from a veterans group and a government welfare fund. His main hope, he said, is to stay alive longer than his wife, so he can continue to take care of her. But he has trouble getting her things she needs, because he doesn't like to leave her alone for more than two hours. His two children lend him no financial help, and one doesn't answer his calls.
"The worst part is the loneliness," Lee said.
South Korea established its pension system in 1988, too late to benefit those like Lee born before or during the war years. There is a welfare system, but its laws are antiquated. Those with children are ineligible, unless they prove their offspring are unwilling or incapable of providing support. Many elderly people don't pursue that exemption because they are embarrassed about their situation.
Even those who had good jobs have fallen back into poverty because they spent heavily on education for their children and saved little money, figuring their kids would provide the care they'd need as seniors.
South Korean President Park Geun-hye pledged during her 2012 election campaign to improve welfare programmes and described a "National Happiness Pension" worth an extra $200 per month. But she was never clear about the funding for her programme and was reluctant to raise taxes. Several months ago, the president scaled back her plan in a controversial move that prompted the resignation of her health minister. Only the poorest 70% of seniors, as opposed to all of them, will receive the new payouts beginning this summer.
For those like Lee, the additional money will make a small difference. For years he has taken extreme measures to limit his spending. To buy medication for his wife, for example, he occasionally takes a 50-minute train ride – free for seniors – to the outskirts of Seoul, where a pharmacy has slightly reduced prices.
During Yang's visit, Lee apologised that he couldn't offer her any food, and he told her a story about the years just after the Korean war, when South Korea was in ruin and the gross domestic product per capita was less than $100. "Back then," he said, "food was so scarce that people didn't ask, 'How are you?' Instead, they'd ask whether you'd eaten.
"Now," he said, "I'm worried about running out of rice again."
This article appeared in Guardian Weekly, which incorporates material from the Washington Post
http://www.theguardian.com/world/2014/jan/24/south-korea-elderly-older-poverty