SEOUL, Nov. 20 (Korea Bizwire) – The aging population and subsequent cut in the labor force could bring down South Korea’s growth rate to the 1-percent level in 20 years, an expert said Friday.
According to government data, Koreans aged 65 or older accounted for 12.2 percent of the total population of some 50 million in 2014, with the ratio to shoot up to over 30 percent by 2040.
“Starting next year, the number of the economically active population aged 15-64 is forecast to begin diminishing, and it will continue to go on the decline by up to 2 percentage points each year starting in 2020,” said Lee Jae-joon, a researcher at the Korea Development Institute, during a symposium in Seoul earlier in the day.
The demographic shift then is projected to bring down the country’s GDP growth rate from the current 3-percent level to around 2 percent in 2020, and further to the 1-percent level in the 2030s, he noted. In 2014, the Korean economy expanded 3.3 percent.
“Even if more elderly land jobs to the level seen in advanced economies, it would not be enough to turn the tide as the portion of the population aged over 65 is forecast to surge too fast,” he said.
In a move to minimize the impact of the dwindling working population, he called for policy measures, such as the reform of the pension and retirement systems aimed at encouraging more senior citizens to be economically proactive.
Asia’s fourth-largest economy has been struggling with low fertility rates and a fast aging population. In 2014, the total fertility rate, or the average number of babies that a woman is projected to have during her lifetime, reached 1.205 in 2014, one of lowest among members of the Organization for Economic Cooperation and Development (OECD).