By Kim Jae-kyoung
Staff Reporter



source:MOFE

South Korea’s cost to support senior citizens is expected to grow at the fastest pace in the world, due to a reduced birth rate and an aging population, according to the Ministry of Finance and Economy (MOFE).

The ministry said that the elderly dependency ratio is expected to jump to 69.4 percent in 2050, as much as 6.9 times the 10 percent in 2000, the fastest growth rate in the world.

The dependency ratio is the proportion of the aged population, or those aged over 65, to the population capable of industrial production, or those aged between 20 and 64.

As a result, an average of 1.4 potential workers will have to support one senior citizen aged over 65 in 2050, compared to 7.9 people in 2005.

The ministry’s report is based on data from the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF).

``The acceleration of population aging and the declining birth rate are the key triggers of the increasing burden on the young generation,’’ an MOFE official said.

The average elderly dependency ratio for OECD member countries is forecast to increase from 20.6 percent in 2000 to 48.9 percent in 2050, the report said.

By nation, the U.S. is expected to see a comparable ratio increase from 18.6 percent in 2000 to 34.9 percent in 2050, Japan from 25.2 percent to 71.3 percent, Britain from 24.1 percent to 47.3 percent, and France from 24.5 percent to 46.7 percent.

The OECD estimates that the nation will post fiscal deficit equivalent to 7.7 percent of the gross domestic product (GDP) in 2050 as a result of an increase in expenditure for the elderly.

The IMF said that a 1-percent rise in the aged population is estimated to reduce the GDP by 0.041 percentage point.

Market experts said that the government should adopt a long-term, systematic plan to deal with this problem by reforming labor, medical and pension sectors.

``The government needs to make more of an effort to help individuals prolong the period of economic activity by creating jobs for senior citizens,’’ a Samsung Economic Research Institute economist said. ``Also, it should develop an educational system for retirees and create more jobs in the public sector.’’

``A key culprit behind low birth rates is the growing burden of childcare. It is urgent to introduce various policies to encourage young couples to have children by providing financial support or tax incentives,’’ he added.

According to the United Nation, the nation’s aged population is forecast to account for 37.3 percent of the total in 2050, the highest in the world, even ahead of Japan.

The U.N. predicted Japan will see its aged population rise to the second highest level with 36.5 percent in 2050, followed by Spain (35 percent), Italy (34.4 percent) and the Netherlands (33.2 percent).

``The anticipated acceleration of the aging population is mainly due to a prolonged life span led by advances in medical treatment and low birth rates triggered by young couples not having children,’’ NSO economist Kim Dong-hoi said.

``Currently, those in their thirties and forties make up the lion’s share of the Korean population, but many of them are not married and don’t have children,’’ he added. ``When these people age over 65, the nation will face a severe unbalance in population composition.’’

kjk@koreatimes.co.kr