South Korea faces skill shortages amidst ageing workforce

The country’s workforce is ageing rapidly, with the mean average age projected to reach 50 by 2030 and 53.7 by 2050, surpassing the OECD average.
By: | July 24, 2023

Organisations in South Korea are increasingly confronting a shortage of highly skilled employees due to the rapidly ageing population. The manufacturing and service industries, in particular, risk losing growth momentum without access to high-tech professionals vital for outlining sustainable business models.

A report conducted by the Sustainable Growth Initiative (SGI) under the Korea Chamber of Commerce and Industry (KCCI) highlighted that the mean average age of employees in South Korea was 46.8 in 2022, a figure projected to rise to 50 by 2030 and further to 53.7 in 2050. This estimation was almost 10 years higher than the Organisation for Economic Co-operation and Development (OECD) average forecast of 43.8 for the same period.

Certain manufacturing industries already exhibit a high concentration of older employees, such as clothing (59.8%), leather shoes (59.6%), wood products (57.3%), textiles (52.6%), and non-ferrous or non-magnetic metals (49.2%).

Geographically, South Jeolla Province leads with 58.7% of organisations having employees aged 50 and older, followed by North Gyeongsang Province (55.2%), North Jeolla Province (53.9%), and South Gyeongsang Province (51.7%). Seoul and Gyeonggi Province have more young employees, with only 38.5% of Seoul-based organisations having employees aged 50 and older.

The SGI emphasised that the rapid ageing of the workforce is expected to hinder productivity, as evidenced by a 2016 report from the International Monetary Fund (IMF). The IMF report indicated that major developed economies, including Europe, experienced an average annual decline of 0.2 percentage points in total factor productivity (TFP) due to their ageing workforce, reported The Korea Times.

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Kim Cheon-koo, a Researcher at SGI, concluded, “The manufacturing industry has many older employees, mostly for low-tech, low-value, and labour-intensive jobs. Government and corporate policies should be reoriented to incentivise young employees to stay motivated, willing, and able to think creatively.”