Expand the economically productive population

Korea`s population exceeded the 50 million mark Saturday. Countries with per capita income of 20,000 U.S. dollars or more and a population of at least 50 million are called the "20-50 Club." Six countries besides Korea are members of this exclusive group: Japan, the U.S., France, Italy, Germany and the U.K. They are all major nations with sizable populations and economic power. With per capita income of 22,778 dollars and a population of more than 50 million, Korea is the seventh member of the club, a clear sign that the country has joined the ranks of advanced powers.

Maintaining membership in the 20-50 club, however, requires Korea to expand its economic growth engines and weather the rapid aging of its population. The economically productive population is forecast to decline around 20 percent in 2040. In contrast, the population of those aged 65 or older is expected to triple to 16.5 million in 2040. Based on the experience of other advanced economies, an aging population reduces labor supply and quality, lowers economic dynamism, and weakens economic growth potential. The Organization for Economic Cooperation and Development recently estimated Korea`s growth potential at 1 percent in 2032 because of the country`s rapidly aging population.

The poverty rate among Korean elderly is 45 percent, far higher than the OECD average of 13.3 percent. Certain Southern European countries such as Greece and Spain have shown how catastrophic the situation can get if a country`s state coffers are empty.

To avoid a grim future, Korea must reorganize its social demographic system. One imperative task is to increase female participation in economic activities. Though the college entrance rate of Korean women jumped from 32 percent in 1990 to 81 percent in 2010, their share of economic participation rose slowly from 50 percent to 55 percent over the same period. Improving state support for childbirth and child rearing is crucial to maximize the effect of the female workforce. The quality of childcare services should be improved, too. Such policies will help raise the country`s birth rate, which was one of the world`s lowest in 2010 at 1.23.

Korea should also strengthen efforts to keep the elderly as part of the economically productive population by extending the retirement age. Baby boomers who have begun to retire are highly educated and strongly wish to participate in society. The country should take full advantage of their skills and experience. Another suggestion is to keep Korean society active by inducing quality workers from overseas. Finding new economic growth engines and enhancing the competitiveness of the service industry are other key tasks for Korea.