Professor Lee Cheol-hee, head of the population cluster at Seoul National University's National Future Strategy Institute
Korea's Labor Crisis Survival Strategy!

Everyone says that the future of the population of South Korea is determined.
It has been a long time since we entered a low birth rate phase, the population is bound to decline, and the Republic of Korea may even disappear.
Professor Lee Cheol-hee, the head of the population cluster at Seoul National University's National Strategy Institute and a leading population economist in Korea, cautiously counters in "Working People Are Disappearing" that the future of South Korea, especially the future of its population and labor market, has not yet been determined.


To be precise, the long-term low birth rate will lead to a decline in the working-age population, but the future will actually depend on how we prepare and act now. After an in-depth analysis, the author offers cool-headed yet realistic advice.
What if older workers filled the void left by younger workers? What if we further encouraged the labor force participation of women and middle-aged and older workers? What if we maximized the utilization of foreign workers? If we could find effective solutions and implement them in practice, South Korea's future could be rewritten without any gloom.
As South Korea's population declines and the number of workers is steadily decreasing, this book, which densely covers survival strategies and the path forward, is intended to help readers view the population crisis from a slightly different perspective and reflect on it in a constructive way.

What is more concerning about the future population projections that suggest the population could decline to 35 million within the next 60 years is not the 'scale' of 35 million, but the 'speed' represented by the period within 60 years.
If South Korea's population was expected to gradually decline to 35 million over the next 200 or 100 years, even a New York Times columnist probably wouldn't have used the word "crisis."
Because responding to or adapting to gradual, slow changes is relatively easy and inexpensive.
The problem of a shortage of military service personnel due to a decrease in the number of births can be addressed more easily if this population change occurs gradually.
For example, the Ministry of National Defense is currently exploring ways to reduce the number of troops by introducing cutting-edge technology. However, replacing personnel with equipment and technology and adapting to them takes a long time.
If changes in market demand due to population decline occur gradually, companies will be able to respond to them at relatively low costs.
However, if the population declines rapidly, it can create serious imbalances in a country's various systems that are geared towards a given population size, and this can result in enormous costs.
Even if there is no specific optimal population and the population size of 35 million is not a major problem in itself, the fact that the population will decrease by one-third by the time the current generation of young people becomes elderly can come as a considerable shock.
Because the younger generation will face a world that is completely different from what they know, expect, and have prepared for.
The experience and knowledge you have already gained will become outdated and no longer relevant to reality.
Adapting to rapidly changing common sense and norms will become more difficult.
Businesses and governments will also face enormous costs in correcting existing systems and practices that are out of sync with the changing world.

--- pp.29-30

Securing a labor force was not only important to American industrialization in the early 19th century.
As a child growing up in the 1970s, I often heard that the most important driving force for economic development in resource-poor Korea was an abundant and highly qualified workforce.
Even in the 21st century, when the introduction of robots and AI is increasing, labor remains a crucial element in the production process.
When a company selects a country or region to establish a production facility or research and development base, the availability of a workforce suitable for the business is one of the most important considerations.
Given the importance of the workforce, it's not surprising that the most frequently cited concern about the impact of rapid demographic change on our society and economy is a shrinking workforce.
The main basis for these concerns is the forecast that the working-age population aged 15 to 64 will rapidly decline.
According to the 2023 future population projections, Korea's working-age population, currently at 36.74 million, is projected to decrease to 16.58 million by 2072.
The prediction that the working-age population will shrink to 45% of its current level within 50 years is quite shocking.
This is the background to the argument that extraordinary measures, such as extending the retirement age and accepting mass immigration, are needed to cope with these changes.

--- pp.46-47

The interruption of women's labor market careers due to childbirth and childcare is also a major factor in the decline in women's productivity.
According to a recent report by the Korea Labor Institute, the gender wage gap appears to widen mainly after the mid-30s.
This phenomenon is interpreted as a result of the tendency for women to be re-employed primarily in informal or non-regular jobs after a career break, and wages in these jobs do not increase as they age.
These factors that make it difficult for women to work also play a role in lowering their productivity.
In this light, policies that promote work-life balance and eliminate the disadvantages women face in the workplace can not only positively expand female employment but also help women fully utilize their capabilities and increase productivity.
Therefore, if the current childcare support, work-life balance enhancement, improved working conditions, and various anti-discrimination policies are successful, we can expect to see women's productivity approaching that of men.

--- pp.78-79

In the future, the number of older workers in the labor market will increase while the number of young workers will decrease.
However, older and younger people differ in the characteristics of their human capital and the nature of the work they primarily undertake in the labor market.
Each job requires different types of personnel.
Some jobs rely primarily on younger workers, while others are better suited to older people.
Therefore, if the age composition of the workforce changes rapidly, an imbalance in labor supply and demand may occur.
Let's use baseball as an example again.
Although this isn't necessarily the case, let's assume that young, fit players are primarily the starting pitchers, and experienced veterans serve as relief pitchers.
If there is a sudden decline in the number of young players and older players delaying retirement, there will be a shortage of starting pitchers and a glut of relief pitchers.
The same goes for the general labor market.
Industries such as healthcare, restaurants and bars, other professional, scientific, and technical services, and sports and entertainment services tend to have a high concentration of young workers in their 20s and early 30s.
On the other hand, industries such as agriculture, forestry, mining, real estate, and transportation have relatively few young workers.
Therefore, if the proportion of young workers decreases due to changes in population structure, the labor supply in industries that are highly dependent on them will decrease more significantly.

--- pp.100-101

To alleviate the imbalance in the supply and demand of medical personnel, we must quickly reach a social compromise to expand medical school enrollment to an appropriate level. To prevent the growth of medically underserved areas, we must devise measures to strengthen public healthcare.
Institutional improvements are also needed to alleviate the imbalance between subjects.
In February 2024, the government announced a policy to increase the number of medical school students by 2,000 starting in 2025 and maintain this number for five years.
This is a plan to increase the number of doctors by 10,000 by 2035.
The medical community strongly opposed this measure, leading to the majority of residents leaving the hospital and medical school professors deciding to resign.
As of early May 2024, when this book was being finalized, the government has allowed each university to voluntarily reduce its quota, adjusting the quota for medical schools to approximately 1,500 by 2025. However, the sharp conflict within the medical school system continues.
Even if the medical school quota is finalized, numerous difficult tasks remain, including the potential deterioration of the quality of medical school education due to a sudden increase in enrollment, determining how to adjust the quota to reflect changes in demand after 2030, and devising measures to address imbalances between subjects.
--- p.155

The proportion of the economically active population aged 65 or older with a college degree in the total working population will also increase rapidly.
Figure 7-4 shows the projected changes in the size and proportion of the economically active population by age and education level until 2072, if the median projection of the future population projection is realized.
The proportion of college graduates aged 65 or older in the total economically active population is expected to increase rapidly from the current very low level, reaching a similar proportion to the economically active population of college graduates aged 35 to 49 by 2072.
The economically active population aged 55 and older, including the middle-aged population aged 55 to 64, is expected to become the main force in the labor market, accounting for approximately one-third of the entire economically active population by 2072.
In this way, the future elderly population will have a higher level of education than the current elderly population, and highly educated elderly workers will account for a significant portion of the overall workforce.
As we saw in Chapter 2, the improved educational level of older adults will act as a factor in improving productivity.
This is because the productivity of highly educated people is generally higher than that of less educated people.

--- pp.196-197

In the United States and some European countries, the economic participation rate of the elderly, which had been declining for a long time, has been rebounding and increasing since around 1990, and this is analyzed to be mainly due to the expansion of employment of power seniors.
This shift is not unrelated to the fact that American jobs have been transformed into age-friendly jobs over the past 30 years.
A recent study used the characteristics of age-friendly jobs introduced above to calculate an age-friendliness index for each occupation.
And we analyzed how this index changed over the long term.
The results show that the age-friendliness index improved in about three-quarters of occupations from 1990 to 2020.
In addition, the proportion of older people employed in occupations with high scores on this index has also increased.
An interesting finding is that the employment of women and young, highly educated people was also positively affected by the increase in age-friendly jobs.
In other words, in occupations with a high senior-friendliness index, employment of women and highly educated young people has also increased relatively over the past 30 years.
This is consistent with research findings showing that women and highly educated young people prefer jobs with age-friendly characteristics.
Recently, it has been detected that the younger generation in Korea also prefers jobs with high autonomy and flexibility.
In the future, this generation will enter the elderly age group.
Therefore, transforming jobs to be more age-friendly can serve as an important foundation for the post-baby boomer generation and even the current young generation to fully demonstrate their productive capabilities even after they grow older.

--- p.220

Foreign workers are not an infinite resource that Korea can import as much as it needs whenever it wants.
Considering the level of skill Korea needs and the cultural background that fits well with Korean society, foreign workers who are currently playing a role in our labor market and contributing to the maintenance of industry and the economy can be considered a scarce resource in the long term.
Therefore, it is not reasonable and may even be dangerous to establish a foreign policy that responds to population changes under the assumption that the supply of foreign workers will remain elastic in the long term.
So how should we approach this problem?
First, we need to make Korea a country preferred by foreigners.
As previously noted, the rise of competitors and the economic growth of sending countries will make it difficult for a policy of attracting foreign workers solely based on wage advantages to be sustainable.
If Korea's labor regulations become more stringent in the future, making it more difficult to work long hours, the wage advantage compared to neighboring countries may decline.
Therefore, efforts are needed to make conditions other than wages more attractive.
In other words, when Korea and Japan pay similar wages, we need to provide a reason to choose Korea.
(syncopation)
Second, it would be better to abandon the attitude of thinking that introducing foreign workers is a panacea for resolving population problems.
Appropriately expanding the introduction of foreign workers will undoubtedly help mitigate the various impacts that demographic change will have on Korean society.
However, realistically, it is difficult to solve all of the social problems in Korea caused by population change by introducing foreign workers.
Moreover, as emphasized just above, it is uncertain whether the influx of foreign workers can be a sustainable solution to the population problem.

--- pp.260-262