Age-Friendly Industries in the Era of the New Normal

[Seoul Sinmun · Open World · December 29, 2015]

Yun Suk-myung, Research Fellow at the Korea Institute for Health and Social Affairs (KIHASA)

As knowledge-based industries—that is, high-productivity industries utilizing new knowledge—lead economic growth, the trickle-down effect, which had been the mechanism for sharing the fruits of growth, is no longer functioning, and income polarization is intensifying. This is because a small number of groups with global competitiveness are monopolizing the fruits of economic growth based on their high productivity. However, considering the increasingly fierce competition among nations to attract capital, it is not easy to blindly impose high taxes on these groups.

Yun Suk-myung, Research Fellow at the Korea Institute for Health and Social Affairs (KIHASA)

The national fiscal condition would improve if more taxes were collected from groups with more means, but because they cannot collect more for various reasons, the national debt ratio is on an upward trend. This is because the resources collected are limited, while there are more areas requiring expenditure due to income polarization and rapid aging. The United States is a representative example, where national debt continues to increase despite the economic growth rate not being low.

Under these unfavorable surrounding conditions, the first baby-boom generation—approximately 7.2 million people born between 1955 and 1963—will soon leave the labor market and enter full-scale retirement. Now, facing the full-scale retirement of the baby-boom generation, which accounts for about 15% of the total population in the New Normal era characterized by low growth, the outlook is full of gloom. As the so-called "sandwich generation," a significant number are being pushed out of their workplaces without having prepared for old age due to the burden of supporting parents and raising children.

We cannot simply sit back because the situation is bad. Like two sides of a coin, where there is a crisis, there is also an opportunity. As mentioned in the recently announced "3rd (2016–2020) Basic Plan for Low Fertility and Aging Society," it is possible to discover new growth engines by reducing the parts that act as crises and increasing the parts that can become opportunities. Now, as large populations worldwide are aging rapidly, fostering age-friendly industries could be a good alternative.

In fact, many countries are struggling with the surge in the elderly population. To lower the social support costs caused by increased life expectancy, it has long been the zeitgeist among most OECD member states to pursue an active old age (working as long as one is capable). In order to work longer as life expectancy increases, it is necessary to create a working environment that can compensate for the decline in productivity that comes with age. This is why I believe various work-assistive devices that minimize the decrease in productivity of elderly workers will be included in the scope of future age-friendly industries.

Traditional age-friendly industries focus on assisting with the inconveniences of daily life caused by aging. In the future, I believe age-friendly industries should be divided into a first stage of active old age and a second stage of old age proper. This means that age-friendly industries must be segmented. Industries that can improve the working environment for elderly workers, anti-aging products that slow down the aging process, and services that support various hobbies of the elderly can all be part of age-friendly industries. After passing through these stages, demand for age-friendly industries in the traditional second-stage sense will surge. Considering that the Nordic welfare states each have a total population of around 5 million, our baby-boom generation of over 7 million can be both a crisis and an opportunity. This is because it is possible to secure international competitiveness through the domestic market before engaging in full-scale exports.

To secure the international competitiveness of our age-friendly industries, which currently show the limitations of small-batch production of many varieties, the participation of large corporations seems inevitable. The problem is that winner-take-all dynamics must also be avoided here. Like a jungle ecosystem where creatures help each other to survive, large and small enterprises must be able to coexist. It is time to foster age-friendly industries in a direction that reduces social support costs through job creation and reduces income polarization through profit sharing.

As memories of high growth fade and income polarization intensifies, there seems to be no better exit than age-friendly industries. Recalling the days when the United States' Time magazine cover in the mid-1980s mentioned Korea as a country where the "can-do spirit is alive," I feel that restoring the industrial ecosystem is more urgent than anything else. Now is the time to stake the nation's fate and exert all efforts to create an age-friendly industry ecosystem as a new growth engine where entities can coexist and prosper together, like a jungle ecosystem.

Source: Seoul Sinmun (original article)