KDI School of Public Policy and Management began to offer a policy program tailored to Korean high-ranking officials of the ministries beginning this year. The program is designed to help the ministry officials better understand a number of issues faced by the Korean economy such as a rapid demographic change and the deepening polarization of the economy.
The 10 day program that ended in Jan. 22 includes a series of lectures by specialists and economic policymakers to review the income distribution policy and the polarization of the labor market. For the second half of the program, participants attended a seminar held at the Tokyo-based the National Graduate Institute for Policy Studies (GRIPS) to share the view with Japanese scholars and specialists on the graying population and its social and economic impact on the Northeast Asian region.
“Japan could be the benchmark case for Korea… I expect the ministries to work more closely to tackle the problems,” said Chin-Seung Chung, dean of the KDI School of Public Policy and Management. Sophisticated management and leadership skills are highly required to cope with the changing environment, he added.
Korea has joined the most advanced group of welfare states by offering a government subsidy for in vitro fertilization in a daring move to address the deepening problem of a low birth rate. The country’s low birthrate and rapidly-aging population, has recently become a long-term concern for the economy as both factors threaten the nation’s growth potential. Korea’s fertility rate dropped from 4.53 in 1970 to 1.22 last year, significantly lower than a rate of 2.1 needed to maintain the nation’s working population. By 2026, the number of over-65s will have exceeded 20 percent of the population, categorizing Korea as a “super-aging society.” The monthly average of employed Korean men aged between 20 and 39 years dropped to a 15 year-low of 5.92 million as the country undergoes a rapid aging process, according to the recent state’s data. Many analysts regard it’s a structural problem. Given the rapidly aging population, the labor market is unlikely to pick up soon, and neither is youth unemployment. A lack of high-quality jobs and fierce competition in the job market is causing more males to postpone job-hunting.
The rapidly aging population is also expected to become the main culprit of the nation’s stagnant economic growth in the coming years. Growth is estimated to remain in the mid 3-percent level between 2011 and 2030 and could drop further below 2 percent after 2030, according to the report titled “The impact of demographic changes on economic growth.” To counter the problems stemming from the drastic demographic change Korea needs a development strategy, which would put more emphasis on enhancing productivity than simply increasing the workforce. Policy measures intended to encourage more workers to participate in the labor market including extending the retirement age would not be as effective as we anticipated in uplifting economic growth, industry experts say. The policy options should focus on enhancing the nation’s competitiveness in the global market by revamping the education system and bolstering research and development, they say.