Labor Productivity Falling, while Labor Cost Rising
The Korea Economic Research Institute announced on Aug. 23 that the ratio of manufacturing workers in their 50s or older almost doubled from 15.7 percent to 30.1 percent from 2010 to last year.
“In this period, the ratio of manufacturing workers in their 30s dropped from 35.1 percent to 27.8 percent, the ratio of those aged 15 to 29 fell from 21.6 percent to 15.2 percent, and the ratio of those in their 40s changed from 27.7 percent to 26.9 percent,” it explained.
According to the institute, the pace of aging of South Korea’s manufacturing sector is much faster than those of the United States and Japan. “From 2011 to 2020, the average age of manufacturing workers rose from 39.2 to 42.5 in South Korea whereas those edged up from 41.6 to 42.8 and from 44.1 to 44.4 in Japan and the United States, respectively,” it said, adding, “The respective average ages in 2026 are estimated at 44.9, 43.6 and 44.6.”
The institute mentioned regulations as the main cause of the rapid aging. “Especially, strict labor regulations have led to overprotection of existing regular workers along with less investment and employment,” it said, continuing, “Under the circumstances, relatively younger persons are finding it hard to enter the labor market in the sector.”
The institute also pointed out that the aging is resulting in a decline in labor productivity and an increase in labor cost, which may seriously undermine the sector.