Korea's long-term productivity feared to fall with increase of childless working women

gettyimagesbank

More women in their early 30s are working in Korea, but it will not necessarily lead to higher productivity and is rather feared to weaken such productivity in the long term, a state-run think tank warned in its latest report.

In the report, titled, “Background on increased economic activities of the women in their 30s and relevant implications,” the Korea Development Institute (KDI) said more women in the corresponding age group were able to take part in the country’s workforce because they are not busy raising children.

It said among women aged 30 to 34, 75 percent were engaged in economic activities in 2022, up from 66.2 percent in 2017.

It also said that, among the women in the aforementioned age group, the ratio of those with children fell to 32.3 percent from 46.9 percent during the cited period.

In particular, the rate for women with two or more children slid to 13.6 percent from 22.9 percent.

Korea's situation is not typical compared to advanced economies, where the rate of women’s participation in the labor market is highly associated with a favorable working environment for mothers.

In most advanced economies, women who have returned to work after having children and taking child care leave account for a significant proportion of the entire workforce.

The KDI’s findings could have negative impacts for Korea in the long term, because the country’s productivity will ultimately fall with the dwindling number of childbirths.

“The surge in women’s participation in Korea’s labor market is indeed closely related to not having children,” the KDI report noted. “Their participation will ease the slowdown of productivity in the short term, but can cause bigger problems in the years to come.”

The possible problems include an accelerated economic slowdown, and a fall in both tax revenue and profit for the national pension scheme.

The think tank suggested improving policies for mothers so that they can pursue careers while raising children at the same time.

Among the possible measures are shortened or flexible working hours for women with infants.

Korea struggles with the world’s lowest fertility rate of 0.78 babies born per woman as of 2022. The rate was down from 0.81 in 2021, marking the lowest number since 1970 when relevant data started to be compiled.

The rate was also the lowest in the OECD which showed an average fertility rate of 1.58.

A total fertility rate above 2 is needed to sustain the population if not accounting for migration.