Rapid aging and low birthrates are often cited as
negative factors that cast dark clouds over the long-term prospects of the
Korean economy. Adding fuel to this gloomy forecast is that the nation’s
working-age people will continue to become fewer and fewer.
Earlier this week, the Bank of Korea said in its report on demographic changes and financial stability that the working-age population, which refers to those aged between 15 and 64, will peak at 73.1 percent of the total population this year. From next year, the figure will show a sharp downward curve, gradually tumbling to 52.7 percent by 2050.
What’s alarming is that the declining pace of our working-age population will be more than double the speed in such countries as the United States, Britain and China over the cited period. Of course, an increase in life expectancy along with rapid aging and a slowdown in birthrates are blamed for that.
The shrinkage of the working-age population is certain to dent economic vitality, thereby bringing down the growth rate and curbing income growth. This in turn could lead to a fall in asset prices and hurt financial stability in the end.
It’s dismal just to imagine that 100 workers will be needed to support 80 elderly people in the next generation. There should be fundamental changes in our approach for all social issues ― education, welfare, jobs and so on.
In fact, the low-growth era ― usually less than 3 percent here ― is in the offing because the nation’s potential growth rate is expected to tumble to the 2 percent range soon. This means that even if the world economy emerges from the current slump, it would be all but impossible for the Korean economy to make a V-shaped recovery.
The best policy would be to put the brakes so the working-age population stops shrinking. The government has made strenuous efforts to raise the birthrate so far, but there have not been satisfactory results indeed.
To begin with, top priority should be given to boosting labor productivity. To our regret, however, Korea ranks 23rd in labor productivity among the member countries of the 34-nation Organization for Economic Cooperation and Development (OECD), an economic club of rich countries.
The government also must focus on maximizing the use of the idle labor force ― women and senior citizens. There is much room for improvement in this, given that the ratio of women engaged in economic activities remains at 54.5 percent in Korea, compared with the OECD average of 61.8 percent.
Last but not least, utilizing foreign students here can be another option, considering that many of them are diligent and competent. Currently, there are about 100,000 foreign students in Korea.
Earlier this week, the Bank of Korea said in its report on demographic changes and financial stability that the working-age population, which refers to those aged between 15 and 64, will peak at 73.1 percent of the total population this year. From next year, the figure will show a sharp downward curve, gradually tumbling to 52.7 percent by 2050.
What’s alarming is that the declining pace of our working-age population will be more than double the speed in such countries as the United States, Britain and China over the cited period. Of course, an increase in life expectancy along with rapid aging and a slowdown in birthrates are blamed for that.
The shrinkage of the working-age population is certain to dent economic vitality, thereby bringing down the growth rate and curbing income growth. This in turn could lead to a fall in asset prices and hurt financial stability in the end.
It’s dismal just to imagine that 100 workers will be needed to support 80 elderly people in the next generation. There should be fundamental changes in our approach for all social issues ― education, welfare, jobs and so on.
In fact, the low-growth era ― usually less than 3 percent here ― is in the offing because the nation’s potential growth rate is expected to tumble to the 2 percent range soon. This means that even if the world economy emerges from the current slump, it would be all but impossible for the Korean economy to make a V-shaped recovery.
The best policy would be to put the brakes so the working-age population stops shrinking. The government has made strenuous efforts to raise the birthrate so far, but there have not been satisfactory results indeed.
To begin with, top priority should be given to boosting labor productivity. To our regret, however, Korea ranks 23rd in labor productivity among the member countries of the 34-nation Organization for Economic Cooperation and Development (OECD), an economic club of rich countries.
The government also must focus on maximizing the use of the idle labor force ― women and senior citizens. There is much room for improvement in this, given that the ratio of women engaged in economic activities remains at 54.5 percent in Korea, compared with the OECD average of 61.8 percent.
Last but not least, utilizing foreign students here can be another option, considering that many of them are diligent and competent. Currently, there are about 100,000 foreign students in Korea.
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