Bleak Labor Market... Bank of Korea Says "Insufficient Even with Mobilizing Elderly, Women, and Foreigners"

Annual Employment Increase of 70,000 to 140,000 Over the Next 5 Years
Less Than Half of the 344,000 Average in the 2010s

On March 15th, workers waiting to find jobs gathered at the early morning labor market near Namguro Station in Guro-gu, Seoul. Photo by Jinhyung Kang aymsdream@

It is projected that the total increase in the number of employed persons over the next five years will be between 70,000 and 140,000 annually, falling short of even half the 2010s average of 344,000. In particular, it is analyzed that this reduction in labor supply will be inevitable even if the government pursues policies to expand employment of the elderly, women, and foreign workers.

On the 30th, the Bank of Korea stated in its report titled "Evaluation and Outlook on the Trend Changes in Labor Supply" that "the annual increase in the total number of employed persons over the next five years (2023?2027) is estimated to be between 70,000 and 140,000, which is below the 2010?2019 average of 344,000."

Despite the deepening low birthrate, South Korea saw an increase in the economically active population, which represents labor supply, during the 2010s. This was mainly due to the expanded economic participation of the elderly aged 55 and above.

However, as the baby boom generation (born 1955?1963), which has been a key pillar of labor supply, all enter their 60s this year, there is an analysis that labor supply will significantly decrease in the future.

According to the Bank of Korea’s comprehensive analysis of detailed groups within the elderly population, if there are no major changes in labor market conditions such as employment policies, the trend of economic activity participation rates among the elderly is expected to gradually slow down due to poor labor market participation of elderly men under 65.

Accordingly, the overall economic activity participation rate trend is expected to turn downward around the mid-2020s. The Bank of Korea’s forecasted minimum annual increase in the number of employed persons is 70,000, which is only about one-fifth of the average increase in the 2010s.

Although the government may implement policies to expand employment of the elderly, women, and foreign workers in response to this shrinking labor supply, even if all these policies are implemented, the projected annual increase in the number of employed persons over the next five years is only between 250,000 and 300,000.

Even if the government immediately pursues policies to expand labor supply, it will be insufficient to fully offset the labor supply reduction caused by rapid aging.

The Bank of Korea emphasized the need to establish economic policies that focus not only on the quantitative aspects of labor supply but also on qualitative improvements such as productivity and human capital accumulation to respond to the potential weakening of growth potential due to aging.

In particular, since economic activity participation behaviors vary greatly even within the elderly population, elderly employment policies should be carefully formulated according to individual characteristics such as gender, age, and education level.

The Bank of Korea stressed, "As the proportion of the elderly population engaged in occupations less sensitive to economic cycles increases, the sensitivity of employment indicators such as economic activity participation rates and the number of employed persons to economic fluctuations may significantly decrease, so efforts to develop statistical indicators for accurately assessing employment conditions should be continuously pursued."

This content was produced with the assistance of AI translation services.