Korea – defying demographics

Cyclically, Korea has been the weakest economy in East Asia in the last 6M. Structurally, its challenges are also among the severest, with the pace of ageing more extreme, and exports particularly vulnerable to competition from China.

In terms of demographics, however, there is one area where Korea looks better than its neighbours: labour market participation. That has risen strongly in recent years, a shift that’s gone hand-in-hand with other structural changes in the labour market.

That’s an important change, meaning that in this way at least, Korea can defy demographics: the rise in the part rate means the size of the labour market isn’t shrinking even as the population does.

The clearest contrast is with Taiwan, where the participation rate has hardly budged. So, while on paper Korea’s demographics are worse than Taiwan, it is in Taiwan where demographics are likely to start biting first.

This has big implications for economies, and markets. To hear about those, and understand more about these demographic shifts, watch the video.

Chapters:

00:00 - Introduction and Context
00:21 - Korea's Labor Market Puzzle
00:50 - Regional Labor Market Overview
01:40 - Wage Growth Discrepancies
02:28 - Supply-Side Explanation
03:27 - Participation Rates and Demographics
05:26 - Part-Time Work and Flexibility
08:04 - Taiwan's Labor Market Contrast
09:37 - Implications for Inflation and Policy
12:50 - Conclusion and Resources