Economic activity rate to fall below 60%

The proportion of people currently working or seeking work in Korea’s labor market is expected to fall below the 60 percent threshold for the first time in 24 years.

Korea’s economic activity rate is predicted to sink to 59.3 percent this year, according to data by Statistics Korea and the National Assembly Budget Office. Korea has generally kept its economic activity rate above 60 percent since 1990.

The economically active population also is expected to fall 2.3 percent to 25.4 million. This would mark the first decrease in the population of the labor workforce since 1998.

The country is likely to face a further decline in the labor market as an increasing number of college students are extending their studies as they find it hard to secure jobs, pursuing higher degrees such as a master’s or doctorate.

Only about 300,000 jobs, or 80,000 fewer than last year, are expected to be created for fresh recruits as the economic slowdown is weighing down investment by the corporate sector, which spells trouble for the new government of President Park Geun-hye who seeks to achieve an employment rate of over 70 percent.

Korea’s employment rate stood at 57.4 percent in January this year, the same as a year ago, according to a report by the Ministry of Strategy and Finance.

A demographic shortfall with the rapidly aging population and low birth rate, in addition to economic hardships amid the global slowdown, are the factors affecting the labor market.

Korea’s aging index ― the ratio of senior citizens aged 65 and over who are economically inactive to young people ― is expected to pass the 80 percent mark to reach 83.3 percent.

Last year, the index stood at 77.9 percent.

By Park Hyong-ki (hkp@heraldcorp.com)