South Korea needs 821,000 workers to sustain 1.9% economic growth by 2033

A projection has been made that to maintain an annual average economic growth rate of 1.9% until 2033, an additional 821,000 workers need to be secured. This is due to the significant decline in the increase of the economically active population aged 15 and over as a result of low birth rates. Accordingly, there is a discussion on utilizing the relatively low employment rates of the younger and female populations as part of the workforce. However, if there continues to be a labor shortage, it seems likely that foreign workers will need to be recruited.

◇ “Economic activity population will increase by 240,000 in the next 10 years… only 8% of the increase from the past 10 years”

The Korea Employment Information Service under the Ministry of Employment and Labor announced on the 17th that the ‘Medium to Long-Term Labor Supply and Demand Outlook (2023-2033)’ contains this information. According to the report, it is expected that the economically active population (workers and the unemployed aged 15 and over) will increase by 248,000 from 2023 to 2033. This is only 8% of the increase in the economically active population of 3.095 million over the previous 10 years (2013-2023).

By age group, the economically active population aged 15 to 64 is projected to decrease by 1.627 million from 2023 to 2033. In contrast, the economically active population aged 65 and over is expected to increase by 1.875 million.

Additionally, the economically active population is predicted to increase by 423,000 from 2023 to 2028. However, it is projected to decrease by 175,000 from 2028 to 2033.

◇ “We must work to increase young and female workers… expanding the foreign workforce should be a last resort”

The Employment Information Service analyzed that measures are necessary to increase the economic participation rates of young people and women in order to address the labor shortage issue, as currently about half of them are not participating in economic activities.

Due to the low birth rate, the proportion of young people aged 15 to 29 in the economically active population is expected to decrease from 18.5% in 2023 to 15.6% in 2028 and then to 13.7% in 2033. During the same period, the economic participation rate for young people is expected to remain in the 49% range, leading to a natural decline in the number of young employed individuals. Therefore, increasing the economic participation rate of young people will be essential to boost the number of young employed.

The female economic participation rate was 55.6% in 2023. It is projected to fall to 55.3% in 2028 and further to 54.7% by 2033. South Korea ranks 31st out of 38 countries in the Organisation for Economic Co-operation and Development (OECD) in terms of women's economic participation rates. If the participation rate of women increases, there will be opportunities to increase the number of employed women.

A representative from the Employment Information Service said, “It is necessary to strengthen tailored policies to promote the entry of potential labor such as young people and women into the labor market,” adding that “expanding the foreign workforce should be the last option to consider.”

◇ “To maintain an annual average economic growth rate of 1.9%, an additional 820,000 workers must be secured”

If the current trend of a decreasing economically active population continues, the number of employed individuals is expected to decline starting in 2029, according to the Employment Information Service. Consequently, to maintain an annual average economic growth rate of 1.9% from 2023 to 2033, it is estimated that an additional 821,000 workers will need to be secured. The 1.9% economic growth rate is a long-term forecast suggested by the Korea Institute for Industrial Economics and Technology.

The labor force that needs to be secured to maintain the economic growth rate is projected to be 36,000 in 2024, 73,000 in 2025, 51,000 in 2026, 26,000 in 2027, and 102,000 in 2028. This is followed by projections of 119,000 in 2029, 76,000 in 2030, 103,000 in 2031, 111,000 in 2032, and 124,000 in 2033.