Korean companies face shortage of skilled workers amid rapid population aging

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By Lee Kyung-min

An increasing number of Korean firms are expected to grapple with shortages of highly skilled workers due to the rapidly aging population, a study showed Thursday.

The country's research and development in turn is forecast to lose its growth momentum, especially in the manufacturing and service industries in need of high-tech experts vital to outlining sustainable business models, the study added.

Experts say the survival of most corporate entities will come under threat unless the government and private firms revise birthrate-related policies and seniority-oriented wage structures and bolster the productivity of aging workers. Also needed is an environment fostering creative and innovative ideas which more often than not come from young workers.

According to the report by the Sustainable Growth Initiative (SGI) under the Korea Chamber of Commerce and Industry (KCCI) released Thursday, the mean average age of Korean workers was 46.8 last year. The figure will inch up to 50 by 2030 and further to 53.7 in 2050.

The 2050 estimate is 9.9 years higher than the OECD average forecasted at 43.8.

Some manufacturing industries have high amounts of workers aged 50 and older, such as manufacturers of clothing (59.8 percent), leather shoes (59.6 percent), wood products (57.3 percent), textiles (52.6 percent) and nonferrous or nonmagnetic metals (49.2 percent).

South Jeolla Province had the highest proportion of firms with workers aged 50 and older (58.7 percent) outnumbering their younger peers, followed by North Gyeongsang Province (55.2 percent), North Jeolla Province (53.9 percent) and South Gyeongsang Province (51.7).

Seoul and nearby Gyeonggi Province had a relatively higher number of young workers. Only 38.5 percent of Seoul-based companies had workers aged 50 and older outnumbering those younger than them, followed by Incheon (42.6 percent), Gyeonggi Province (41.7 percent), Daejeon (41.4 percent) and Sejong (34.5 percent).

SGI said the rapid aging of the workforce can greatly hinder productivity, as illustrated by a 2016 report from the International Monetary Fund (IMF).

The report cited by the SGI said major developed economies including Europe's have experienced an average decline of 0.2 percentage points annually in total factor productivity (TFP) due to their aging workforce.

“The manufacturing industry has many older workers, mostly for low-tech, low-value and labor-intensive jobs,” said Kim Cheon-koo, a researcher at SGI. “Government and corporate policies should be reoriented to incentivize young workers to stay motivated, willing and able to think creatively.”