Workforce weakens across Asia
According to the Korea Labor Force Development Institute for the Aged on Sunday, G Braun’s Incheon shop made the most among the 140 so-called sliver cafes, featuring employees aged 60 or older, nationwide. It made an average of between 700,000 won ($585) and 800,000 won a day.
While G Braun is an example of an effective utilization of the aging workforce, it also shows the changing demographics of Korean society.
In fact, one of the biggest concerns facing the Korean government is the shrinking population of those who could contribute to the nation’s economic growth. The financial burden of establishing a family and purchasing a home has caused young Koreans to postpone marriage and giving birth.
Many think tanks, including the state-run Korea Development Institute, have projected that the country’s economic growth rate could fall to as low as the 1-percent range by 2030, citing aging society as the primary cause in dragging down the productivity rate in general.
“We are aware of such concerns and the government, in fact, has been working to implement some of the suggestions that the Asian Development Bank (ADB) has made, but it is not an easy issue to solve right away,” said Min Kyung-sul, a director at the Ministry of Strategy and Finance. “We will look for ways to solve the issue of low fertility by reviewing various ideas discussed internationally.”
A recent study by the ADB released last week showed that the demographic changes taking place domestically will likely affect Korea’s gross domestic product per capita growth; potentially falling 1.5 percent between 2021 and 2030. This is a stark contrast to the period between 1981 and 1990 when such demographic changes only lowered Korea’s GDP per capita growth by 0.09 percent.
But it isn’t only Korea who will see changes to economic growth from demographic shifts.
According to the ADB, the workforce population of major developing countries in Asia will still expand by 2050, but due to the declining fertility rates, the speed of expansion has been slowing since 1990.
The report showed that Asia’s workforce reached its highest growth rate of 29 percent on average between 1990 and 2000, but has since declined to 18 percent from 2010 to 2020. It is expected to fall to 6 percent by 2030 and forecasted to post a negative growth of 5 percent by 2050.
The Korean workforce growth rate will start to post negative growth by 2030, the ADB said.
The bank recommended that Asian countries need to focus on raising low immigration rates, as their economies would benefit from immigrant labor.
“Although a sensitive issue for economies relatively closed to immigration, their accelerated aging demographic may prompt a transition towards easing migration policies,” the report said. “An increase in migration could help augmented the labor force. A World Bank study says there is evidence that aging populations in East Asia increasingly realize the need to raise historically low immigration rate.”
The ADB also added that considering extending the retirement age and increasing expenditures on family policy programs aimed at empowering women through opportunities to combine family and employment can generate positive fertility response.
In hopes of preventing Korea’s economic growth from further declining due to the shrinking population, the Korean government is currently mulling over the idea of raising the senior age from the current 65. Also government branches are in discussion on whether to raise the legal retirement age from the current 60 to an older age.
Even though the government has announced various measures such as adopting the peak wage system in public institutions and encouraging many private sector businesses to follow the system, a recent study showed that the average retirement age was still lower than the government’s goal. The peak wage system aims to gradually cut salaries of experienced staffers after they peak at a certain age, generally between 55 and 60, which companies can use to hire more young people.
According to Saramin, a job information portal, only about 45.3 percent of 201 companies said they were running a retirement age system. Among those who said they have such a system, the average age of retirement for workers at those companies was 59 years, but the actual age that workers tend to leave work was 51.4 years.
About half of companies said they have extended the retirement age last year or plan to do so this year. About half of those who have already done so or intend to said they were going to as the government wants them to. Another 45.7 percent said they will extend the age to have more skilled workers. Multiple answers were allowed.
BY KIM YOUNG-NAM [firstname.lastname@example.org]
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