Issue Slowing industrial growth in a shrinking society

Summary

As Korea shifts toward a shrinking society marked by very low fertility, ageing and population decline, growth drivers in labour, capital and markets are weakening, making stagnant industrial growth and productivity a structural risk. A falling working-age population closes off growth based on adding labour, while a shrinking domestic market and weaker regional industries lower potential growth. Selective growth in the capital region and advanced clusters coexists with decline in provincial areas, traditional manufacturing and services, deepening polarisation. Some industries lose competitiveness to skill shortages and rising wages while others remain trapped in low-wage, unstable jobs, so labour shortage and idle labour exist side by side. The survey expects prolonged low or negative growth, weaker fiscal revenue, rising welfare spending and regional and generational conflict, making the design of a manageable low-growth path a national priority.