South Korea has officially entered the era of “demographic onus” this year, where a shrinking workforce is expected to slow economic growth due to a low birth rate and aging population. The country has transitioned from a demographic bonus, where the economy naturally expanded with a growing workforce, to a demographic burden, where the number of employed individuals is projected to decline annually unless major changes occur. This shrinking workforce could potentially lead to long-term economic stagnation, with fewer people available to spend, inherit skills, or pay taxes.
According to Kim Ji-yeon, a researcher at the Korea Development Institute (KDI), South Korea’s employed population is projected to decrease by 12,000 to 60,000 this year compared to last year, due to a decline in the working-age population. Assuming no changes in employment conditions, this decline is attributed solely to a shrinking labor force. Using Statistics Korea’s population projections, Kim accounted for shifts in the number of people aged 15 and older, including foreign residents, as well as demographic changes within the 30–59 age group.
Despite the gradual retirement of South Korea’s first baby boomers (born 1955–1963) since the late 2010s, employment numbers continued to grow until last year. While the working-age population (ages 15–64) peaked at 36.86 million in 2017 and has since declined, increased employment among older workers and the entry of the relatively large early 1990s cohort into the job market helped sustain workforce numbers. Annual births rose from 620,000–640,000 in the late 1980s to 700,000–730,000 in the early 1990s, creating an “early 1990s generation effect” that temporarily offset the decline in the working-age population.
However, this effect is diminishing. Most of the early 1990s cohort has already entered the labor market, with many now over 30. Meanwhile, the early 2000s generation, often referred to as a “demographic cliff,” is significantly smaller. While 640,000 people were born in 2000, the number fell to 560,000 in 2001 and dropped further into the 400,000s from 2002 onward, reaching just 439,000 by 2005. “Starting this year, late-1990s to early-2000s birth cohorts are entering the workforce, but their absolute numbers are far smaller than those of their predecessors,” Kim explained.
The decline is expected to accelerate, as annual births have fallen into the 270,000 range since 2020. According to projections from Statistics Korea, the working-age population will drop below 30 million by 2040, when those born in 2020 reach college age, further shrinking the country’s labor supply.
As the workforce naturally declines, key industries like manufacturing face growing instability. The so-called “root industries,” such as casting, molding, pressing, and machining, are particularly at risk. The share of workers under 30 in these fields fell from 32% in 2018 to 25% in 2024. “Korea’s manufacturing sector has maintained its technical expertise through generational knowledge transfer, but that continuity is now in jeopardy,” said Kim Hyun-jong, director of the Korea National Ppuri Industry Center (KPIC).
The demographic burden is also expected to shrink the domestic market. “Labor shortages in sectors like healthcare, transportation, and food services are expected to worsen,” said Lee Chul-hee, an economics professor at Seoul National University. If these industries contract, overall economic circulation could slow, deepening domestic stagnation.
Lee emphasized that the current employment crisis stems from a shrinking youth labor force. “Rather than relying on older workers, South Korea should focus on reintegrating those who left the workforce due to childbirth or caregiving,” he said.
