Ill effects of aging population

Longer life expectancy can be a blessing for individuals but a disaster for society in general. In Korea, 7.1 million baby boomers born between 1955 and 1963 will soon retire amid a rapidly decreasing number of youth due to the falling birth rate. The U.N. says the ratio of the economically active population to the elderly in Korea will rise from 14.7 percent in 2009 to 62.9 percent in 2050, second only to Japan among member economies of the Organization for Economic Cooperation and Development.

A study by the Korean Strategy and Finance Ministry found that the rapidly aging society will cause a rise in pensions and welfare spending, aggravating the nation’s fiscal soundness. Advanced economies with aging societies have experienced eroding labor quality, an economic slowdown caused by decreased savings, investment and consumption, and the subsequent weakening of growth potential.

According to a report by the Population Reference Bureau, a private, nonprofit organization that informs people around the world about population, 12 working people supported one senior citizen in the 1950s, but the figure has fallen to nine at this time and will drop to four in 2050. If the trend continues, 1.4 economically active people in Korea will have to support one elderly citizen in 2050. The International Monetary Fund warns of aging as a serious risk factor for Korea’s fiscal soundness. Without specific measures to tackle the problem, Korea’s national pension fund will be depleted between 2050 and 2060, the fund forecasts. According to the Center for Strategic and International Studies, Korea ranked 19th among 20 countries in income adequacy. A low income adequacy means that the state has to cover the cost of supporting the elderly. Korea’s elderly poverty rate is 45 percent, the world`s highest and far above the OECD average of 13.3 percent.

Korea must overhaul its social system to avoid such dismal projections. The country has to offset the decrease in the working age population caused by rapid aging by enhancing labor productivity, increasing the influx of external workers, and encouraging women’s participation in economic activities. Also needed is expansion of national pension coverage and maximizing the labor force by raising the retirement age. The baby boomer generation has a relatively high educational background and a strong desire to participate in society. Nowadays, many who are age 65 or over are too healthy and active to be called the elderly.

Over the long term, Korea needs to create a society in which the elderly can be involved in production and consumption by creating market demand. To do so, elderly-friendly housing and transportation environment are needed as well as various routes for their social participation so that senior citizens can live healthy lives. The promotion of the elderly-friendly industry can lead to future growth.