The “25% fear” is looming over the South Korean industry. Following the retirement of the first generation of baby boomers (born between 1955 and 1963), the second generation (born between 1964 and 1974, aged 50 to 60) will begin to retire early this year.
With 7.4 million still working, accounting for 25% of South Korea’s economically active population, the industry’s impending retirement of the second wave of baby boomers is a growing concern. As they retire, the number of young adults (12 to 22 years old) entering the workforce is only 56% of the second generation of baby boomers, creating a structural labor shortage due to the demographic cliff. There are concerns that the loss of a highly productive young adult population with high levels of fitness, adaptability, and mobility could reduce the overall vitality of the economy.
The problem is first becoming visible in traditional manufacturing production, installation, and after-sales service jobs, which the second generation of baby boomers has sustained. These jobs have become less attractive to younger generations and are already filled with foreign labor. However, the plant construction sector, which works on national infrastructure, and cargo transportation, which handles domestic logistics, are struggling because they do not have permission to hire foreigners. The situation is similar for large companies and high-tech industries such as IT and semiconductors. Except for a few well-paying jobs, the labor shortage has already started.
The shipbuilding industry, which recently reclaimed the world’s top spot from China, is already experiencing a labor shortage, worsening when the second wave of baby boomers retire. Of the 27,000 production workers who weld thick plates at the docks of HD Hyundai Heavy Industries’ Ulsan and Geoje shipyards, 42% (11,400) are aged 50 or older. Foreigners comprise 16% (4,300) of the workforce, but it is hard to maintain the top position in the world rankings with employees who face communication barriers.
POSCO, Korea’s largest steelmaker, will see more than 2,500 people, or 20% of its production workforce (13,500), retire over the next five years. The nature of the work—making iron in blast furnaces at over 1000 degrees Celsius, removing impurities, and creating high-quality iron from proprietary recipes—requires technicians with 20 to 30 years of specialized expertise. However, fewer and fewer young people are willing to do this work, making it challenging to stay competitive. “The problem is actually on our doorstep, but we don’t see many countermeasures,” said a local businessman.
At Sam Heung Heat Treatment, Korea’s largest heat treatment company in Milyang, South Gyeongsang Province, only two of the 109 employees are in their 30s. Fourteen are in their 40s, 35 are in their 50s, 56 are in their 60s, and three are in their 70s. Those over 60 make up 54% of the workforce, making them the backbone of the plant. CEO Joo Bo-won said, “Retirement age is now meaningless for small and medium-sized manufacturers like us. If heat treatment, an essential task in the manufacture of auto parts, stops, the production lines of Hyundai and other automakers will come to a halt.”
The transfer of skills from veteran workers is also being hampered. “To do shape processing work, you need to be able to read drawings, program equipment, and understand the fine differences in machine cuts, but there is no one to pass on the skills,” said Jang Seo-ho, 60, a veteran mold maker at a mold manufacture company in Gyeonggi Province.
Shin Yong-mun, the chairman of the Korea Die Mold Industry Cooperative, said, “If the foremen and supervisors in their late 50s leave, the expertise will be lost.”
