On March 1, at Sinseondae and Gamman Piers in Busan Port Terminal, there were large piles of containers being imported and exported. S. Korean exports, which have been a key driver of the Korean economy, have experienced negative growth for the fifth month in a row. Meanwhile, imports have increased, resulting in a year-long trade deficit. (image courtesy of Yonhap)
SEOUL, March 7 (Korea Bizwire) – Korea faces a slowdown in job growth due to changes in its demographic structure, which will reduce the country’s potential growth rate in the coming years.
According to Park Yang-soo, head of the Bank of Korea’s Economic Research Institute, the average annual increase in the number of employed people is expected to be between 70,000 to 120,000 over the next five years.
He made the assertion in an article titled ‘The direction of the trend of the number of employed people in Korea’ on the BOK’s website blog on Sunday.
Last year, the number of employed people increased by 820,000 due to the resumption of economic activities, but the growth rate began to decline in the middle of the year. It dropped to 410,000 in January, and many forecasters, including the Bank of Korea, expect the overall growth rate to remain around 100,000 this year.
This slowdown in job growth is attributed to a decline in the population rather than the fiscal cliff. The growth of the population aged 15 and over has been declining due to the declining birth rate, and the number of people of working age (15-64) has been declining since 2018 due to the baby boomers reaching retirement age.
According to the Bank of Korea’s growth accounting methodology, Korea’s potential growth rate between 2023 and 2027 will be lower than in the late 2010s.
To raise the potential growth rate by about 0.2 percentage points during this period, the number of employed people needs to increase by 80,000 to 100,000 per year on average from the baseline level through employment promotion measures such as increasing the participation rate of women in the labor force and better utilizing foreign labor.
“Even if the year-on-year increase in the number of employed people falls to the 100,000 level soon, it should be understood that it is more likely to be due to a slowdown in the growth trend of labor supply due to demographic changes than a lack of job creation,” Park said.
Lina Jang (linajang@koreabizwire.com)
