It is forecast that both the economically active population and the employed population will enter a declining trend starting from 2028. To sustain economic growth, it is analyzed that an additional workforce of up to 900,000 people will be needed by 2032.
On March 19, the Korea Employment Information Service (KEIS) announced the Medium to Long-term (2022-2032) Labor Supply Outlook and Additional Needed Labor Forecast, which includes these findings. The working age population aged 15 and over is expected to increase by 316,000 individuals from 2022 to 2032. This growth rate represents only one-tenth of the increase of 3.14 million individuals observed in the previous decade from 2012 to 2022.
The working age population is projected to peak at 29,485,000 individuals in 2027 and then begin to decline from 2028, reaching 29,238,000 individuals by 2032. When considering the working age population aged 15 to 64, the decline starts earlier, with a net decrease of 1,703,000 individuals expected by 2032.
During the same period, the working age population aged 65 and over is projected to increase by 2,019,000 individuals. Consequently, the proportion of individuals aged 65 and over in the total working age population is expected to rise from 11.6 percent in 2022 to 18.4 percent in 2032. The labor force participation rate is forecast to decline from 63.9 percent in 2022 to 63.1 percent in 2032, with a notable decrease observed among the youth aged 15 to 29 from 49.8 percent to 48.1 percent.
By sector and occupation, it is anticipated that the demand for care and healthcare services will increase due to population aging, leading to an increase of 998,000 employees in the health and welfare industry. Additionally, the digital transformation is expected to drive employment growth in the information and communication technology and professional scientific and technical services sectors, contributing to an overall increase in service industry employment. On the other hand, it is predicted that employment in the manufacturing sector will decrease by 145,000, in the construction sector by 126,000, and in the agriculture, forestry, and fisheries sector by 94,000 by 2032.
A decrease in the working age population poses challenges for economic growth. KEIS has projected that an additional 894,000 workers, approximately 3 percent of total projected employment, will be needed to sustain economic growth at an annual rate of 2.1 percent between 2022 and 2027 to 1.9 percent between 2028 and 2032. Analysis suggests that additional workers will be particularly necessary in the healthcare and welfare services sector, where 138,000 workers are needed; the manufacturing sector, which will require 137,000 additional workers; and the wholesale and retail sector, which will require 118,000 more workers.
KEIS stated, “Achieving an economic growth rate of 1.9 percent to 2.1 percent will be difficult if the necessary workforce is not adequately supplied.”