The fast-aging population will bring labor shortages and low productivity to the country in the next couple decades, a report said Wednesday.
Korea’s dwindling workforce, coupled with rock-bottom fertility rates and prolonged longevity, may weaken economic growth after 2020, said Park Chan-young, a research fellow at Samsung Economic Research Institute, a leading private think-tank.
“The government needs to come up with strategies to minimize the side effects of aging in the labor market from now onwards,” he said in the paper.
Korea is one of the world’s fastest aging countries. According to the Korea Institute of Finance, Korea will become the world’s most aged society by 2050, and people aged 65 or older are likely to make up 38.2 percent of the total population, more than tripled compared with 11 percent last year.
The country’s birthrate is 1.22, the lowest among members of the Organization for Economic Cooperation and Development.
But the growth rate of its life expectancy is 18.4 percent, one of the highest. The Word Bank estimated the average life expectancy of Koreans at 83.5, compared with 82.6 of Japan, 81.5 of France and 78.4 of the U.S.
Park projected the economically active population, which stood at 25.82 in 2010, to hit the peak of 26.81 million in 2018 and drop to 24.58 million by 2030.
Such figures have been building concerns over a weak safety net for the elderly and shrinking labor force.
To expand the workforce, Park said the government should utilize unemployed workers, women and foreigners, and adopt job-sharing and peak salary policies.
The peak salary system guarantees employment until workers reach retirement age, but allows the company to gradually cut their salaries in the meantime.
The scheme was much touted by the Lee Myung-bak administration when the state-run Korea Electric Power Corporation adopted it in July last year, but later faced political backlash as skeptics argued that it not only hikes costs for companies but also keeps the young from getting jobs.
By Shin Hyon-hee (email@example.com