South Korea Working Population Fell All-Time Low Last Year.
SEOUL: The number of people of working age in Asia’s fourth-largest economy fell for the first time ever last year, South Korea’s official statistics agency said Monday (Aug 27).
In the decades after the Korean War the South propelled itself from a devastated ruin to the world’s 11th-largest economy and a member of the OECD club of advanced nations.
But it faces looming demographic challenges with a rapidly ageing population.
The country has one of the world’s lowest birth rates as people marry and have children later, amid worries over costs and as women look to focus on their careers.
In an annual census, the working-age population, defined as those aged 15 to 64, fell by 116,000 in 2017 to 36.2 million, Statistics Korea said.
It was the first time the figure had fallen, it added.
The total population rose to 51.4 million, up 0.3 per cent, with 14.2 per cent of people aged 65 and over.
Earlier this month figures showed births plummeting 12 per cent in 2017 to 357,771, an all-time low.
The fertility rate – the number of children a woman can be expected to have in a lifetime – also dropped to a record low of 1.05. The rate needed to keep a population stable is 2.1.
Economists have coined an unsettling term to describe a phenomenon in countries with low fertility rates and poor economic growth: demographic time bomb.
Japan’s situation is the most extreme example. Its population has been steadily declining for the last decade, with 2016 marking the first time in 117 years that the total number of births fell below one million. Meanwhile, the number of people over 65 continued to grow.
According to a new report from the International Monetary Fund, Korea could be next.
The current economic and social landscape in Korea looks a lot like Japan did in the early 1990s, the report explains. If left unchecked, the country could see its own demographic time bomb emerge sometime around 2035.
The IMF report, entitled “Korea’s Challenges Ahead — Lessons from Japan’s Experience,” finds that Japan’s working-age population shrank as people continued to age into retirement. In 1995, about 63% of people were considered to be of working age (between 18 and 65). By 2015 it had declined to 56%. Korea’s current working-age population is 66.5%, but analysts expect that number to match Japan’s 2015 rate within the next couple of decades.
As Japan’s workforce dwindled, the country saw its projected rate of economic growth fall from an average of 4% in the late 1980s to less than 1% in the 2000s. Korea, meanwhile, saw its own rate fall from 8% in 1991 to 2.9% in 2015.
Demographic time bombs are hard to reverse because there isn’t a single factor that causes them. In the case of both Korea and Japan, the problem is caused by a combination of work schedules that leave little time for dating, longer life expectancy, a decreasing number of young people to shoulder the costs of caring for seniors, and a traditional culture that doesn’t favor women in the workplace.