Media  Global Economy  2022.06.22

In South Korea, turning 50-year-olds into the digital generation to keep them working under good conditions

Le Monde on June 3rd, 2022

This article was initially published in French in Le Monde newspaper on 3. June 2022, as part of a series of monthly columns on Asian economies. The original article can be found here:

Economic Policy Korean Peninsula

In his column for "Le Monde", Sébastien Lechevalier stresses the need to train the aging workforce in digital technologies, a condition for their productivity.

Column. South Korea is facing the fastest aging of its workforce among the countries of the Organization for Economic Cooperation and Development (OECD): people aged 50 to 64 represented a third of the working age population (between 15 and 64) in 2019 compared to 16% in 1990. And their share will increase in the years to come.

While most studies confirm that age has a negative impact on individual productivity after a certain threshold, which varies but is generally in the 40s, ageing raises fears of a rapid decline in labour productivity and the emergence of major social problems linked to the low employability of people over 50.

The challenge at this stage is not so much to raise the retirement age as to keep the over-50s at work under good conditions, by ensuring that their knowledge is not obsolete and that they remain productive, in order to maintain their employability and avoid the multiplication of the working poor among the over-50s ("Can older workers stay productive? The role of ICT skills and training", Jong-Wha Lee, Do Won Kwak and Eunbi Song, Journal of Asian Economics, April 2022).

The issue is all the more urgent as the structure of the South Korean economy is rapidly changing under the impact of digitalization. The information and communication technology (ICT) skills gap between generations is likely to further deteriorate the relative productivity of older workers.

Decline from around 42 years of age

For this reason, the three South Korean economists focus on measuring the impact of age on labor productivity, but also the effects of ICT skills and participation in ICT training programs on labor productivity.

Their main contribution to this effect is the construction of an ICT skills indicator that takes into account not only the ability to solve problems in technological environments, but also the actual use of these skills at work, in relation to the organization of companies.

The results of the study confirm the decline in individual productivity from the age of about 42, but they also show the positive effects of ICT skills and training on their productivity, effects that are even greater than those observed among younger workers!

These very encouraging results must be qualified, however, as they are associated with risks of rising inequalities.

First of all, they only concern full-time employees, as the data for other workers is too incomplete or unavailable.

A real societal choice

Secondly, these positive effects for older workers only concern those who have a high level of education or whose work requires intensive use of ICT.

Finally, participation in training programs is characterized by a strong endogeneity that is not well controlled: it is not necessarily the workers who need it the most who benefit from it!

All in all, while investment in training for all workers, including older ones, must be a priority for both government and companies, with a fair sharing of the associated costs, it is no less true that the use of new technologies depends strongly on the organizational forms of companies, which are more or less favorable to the development of digitalization.

This is therefore a real choice for society regarding the future of work in a digitized world, which the French public debate, polarized on the retirement age, must address as soon as possible.