South Korea’s aging population — which will make it one of the oldest countries in the world over the coming decades — is the country’s most challenging long-term issue, according to the Secretary General of the Organization for Economic Cooperation and Development (OECD).
South Korea is currently the fourth-youngest country in the OECD. But when this generation ages, the country will be faced with major challenges: including how to deal with increases social welfare costs, and how to utilize older workers.
Secretary General Angel Gurria addressed these concerns last month:
He projected that the aging population will increase the country’s public social spending to 29 percent of gross domestic product by 2060 from the 10 percent tallied in 2013.
Related to this, Gurria underlined the need for South Korea to better utilize older workers, who have to retire at a relatively early age despite their extended life expectancy.
“Extending their careers requires increasing life-long learning to boost skills and shifting away from the seniority-based wage system,” he said. “So the adoption of the wage peak system is a positive step.”
And the South Korean government has been studying this problem for years.
They are planning to put several policies in place to curb the demographic transition: a higher retirement age goes into effect next year; it is studying how to use technology to assist with caregiving, so more young women can enter the workforce; considerations are being given to encouraging immigration.
Some of the government’s thinking was outlined earlier this year in a piece by Lee Sang Ok, a deputy director at the country’s Ministry of National Defence.
On retirement age:
To forestall an imminent decline in the workforce, the South Korean government will raise the current retirement age from 55 to 60 in 2017. It is also considering raising the retirement age for civil servants from 60 to 65. By enabling older workers to continue contributing to the economy, the government hopes to sustain economic growth while reducing the tax burden on the shrinking younger population.
On technology as a caregiving tool:
To defuse the impending demographic crisis, the South Korean government is looking to technology. For instance, it wants to see one robotic device in every household by 2020 to help ease the burden of elderly care and boost the country’s female labour participation rate. South Korea already has the world’s highest robot density. In 2014 there were 478 robots per 10,000 workers, according to the International Federation of Robotics. But the country is set to leverage on automation even more.
And more:
Other ministries are similarly taking steps to defuse the country’s looming demographic crisis. The high cost of education, youth unemployment and social norms that disadvantage single parents are now being targeted to raise the country’s dismal birth rates.
There are also mounting calls for the country to welcome back overseas Koreans and to even look to immigration to increase the population. Mindsets in South Korea are slowly changing and the country has demonstrated in the past an incredible ability to overcome great adversity. When the dust finally settles, a more dynamic South Korea might just emerge from this crisis.
Read Lee Sang Ok’s full piece here.
