South Korea's employment growth is set to enter a virtual standstill over the next decade, with the annual average growth rate of employed workers projected at 0%. To achieve long-term economic growth of 2% by 2034, more than 1.22 million additional workers will be needed, according to a new estimate. Both the economically active population and the number of employed workers are expected to begin declining in 2030.
The Korea Employment Information Service (KEIS) released its "Mid- to Long-Term Workforce Supply and Demand Outlook" on Wednesday, projecting labor market supply (economically active population) and demand (employed workers) through 2034 and presenting estimates of additional workforce requirements.
According to the outlook, Korea's economically active population grew by 3.292 million between 2004 and 2014, and by 2.563 million between 2014 and 2024. However, between 2024 and 2034, it is expected to increase by just 136,000. The economically active population is forecast to rise by 346,000 in the first half of the projection period (2024-2029) but reverse course in the latter half (2029-2034), declining by 210,000.
The number of employed workers, which grew by 2.678 million between 2014 and 2024, is projected to increase by only 64,000 between 2024 and 2034. Starting in 2030, employment growth is expected to turn negative, with the total number of employed workers also declining.
The outlook projects that between 2024 and 2034, the number of employed workers will rise by 64,000 to 28.639 million, with an annual average growth rate of 0%. This marks the first time KEIS's regular analysis has projected a 0% growth rate for employed workers. KEIS said the economy "has effectively entered a stagnation phase in employment." It is also the first time the agency has assessed the labor market as being in a stagnation phase.
Sector-by-sector employment showed a stark contrast driven by aging and technological development. Between 2024 and 2034, health and welfare services are projected to see the largest increase among service industries, adding 982,000 workers. The professional, scientific and technical services sector and the information and communications sector, both expected to expand alongside the AI industry, are projected to add 136,000 and 93,000 workers, respectively. By contrast, the wholesale and retail sector and the manufacturing sector, both expected to be hit by industrial transition, are projected to lose 431,000 and 209,000 workers, respectively.
KEIS analyzed that to achieve the long-term economic growth target of 2.0% set by the Korea Institute for Industrial Economics and Trade, an additional 1.222 million workers must enter the labor market by 2034. The annual average workforce requirement is 54,000 for the first half of the period and 191,000 for the second half. Accordingly, KEIS recommended that systematic responses are needed to ensure adequate labor supply, given the arrival of a significant structural transition in industry and the labor market.
"Going forward, employment policy will need to place greater importance on expanding the use of potential workforce, as well as on job transition, retraining and workforce redeployment policies that respond to structural changes by industry and occupation, rather than simply expanding the number of employed workers," said KEIS President Lee Chang-soo.
Meanwhile, the Employment Policy Deliberation Council held the same day discussed this year's employment outlook and policy direction. The employment rate and unemployment rate this year are projected at 62.9% and 2.8%, respectively, similar to last year's levels. "The shift to a decline in the economically active population and employed workers in 2030 is a signal that the structure of the labor market itself is changing," said Labor Minister Kim Young-hoon. "We will help young people, women and older workers enter the labor market smoothly, and strengthen workforce development for promising future industries."
