[Population Decline Impacting Industry] Not BMW or Toyota... Hyundai's Real Shortage Is 'Empty Strollers'

Industrial Landscape Transformed by Rapid Population Decline
Significant Changes in Corporate Workforce Structure Due to Aging
Potential Decline in Potential Growth Rate
Worsening Polarization Amid Employment and Income Instability
Elderly Emerging as Major Players in Industry
High Risk of Future Deficits in Youth-Oriented Sectors Like Telecom and Gaming

Editor's NoteThe tsunami of population decline is completely reshaping the landscape of Korean industries. Population decline has already begun to affect not only children's clothing and educational materials but also key industries such as automobiles. However, as the decline accelerates, we have now entered a stage where the youth population faces extinction. In 1993, the population of people in their 20s in South Korea was 9.11 million, but 30 years later, it has shrunk to only 6.25 million. The number of consumers itself has decreased.
Consumption patterns have also changed from the past. Nowadays, young people do not buy cars. In 2015, the number of cars purchased per 1,000 people under 30 was about 60. However, now that number has dropped to below 45. Considering the sharp decline in birth rates, car sales could potentially be cut by more than half in the long term. Because of this, there is even talk that the biggest threat Hyundai Motor and Kia fear is not Toyota or BMW, but population decline. Most Korean companies have started to revise their R&D, marketing, and sales policies in response to the low birthrate era. Asia Economy has prepared a series of articles analyzing how population decline is transforming the Korean economy.

Visitors at the pet expo "Pet Seoul Kaha" are seen looking at strollers for pets. According to the online open market Gmarket, sales of pet strollers surpassed those of baby strollers for the first time ever during the first to third quarters of last year.

54.9% → 30.8%.

This is the scale of change in the proportion of Samsung Electronics employees under 30 over the past decade. Until 2012, more than half of all employees were under 30, but by 2022, that number shrank to about 3 out of 10. During the same period, the proportion of employees aged 40 and above more than doubled, increasing from 12.7% to 27.9%. At Hyundai Motor, among approximately 73,000 domestic employees, nearly half?about 32,000?are aged 50 or older. The low birthrate, aging population, and demographic cliff have brought significant changes to corporate workforce structures.

The declining birthrate and intensifying aging have negative impacts on the overall economy. Productivity decreases, dependency ratios rise, household disposable income shrinks, and saving capacity diminishes. Reduced household consumption leads to higher corporate financing costs and decreased investment, which likely lowers potential growth rates. Increased pension and medical expenses add to government burdens. This means the risk of a vicious economic cycle becoming entrenched has grown significantly.

Newborn room at a public postpartum care center in Seoul
[Photo by Yonhap News]

As the youth population itself shrinks, employment and income insecurity among the 20s and 30s generations have increased. With growing burdens of housing and child-rearing, giving up on marriage or childbirth is no longer something to be criticized. Research also shows that aging affects income inequality.

According to analysis by Min-gyu Son, a researcher at the Bank of Korea, about 30% of the increase in household income inequality since 1995 is attributed to the growing elderly population. For the elderly, retirement leads to widening gaps in labor and business income among households, and differences in accumulated assets cause rental income inequality to rise as well.

The Elderly Population with Large Numbers Becomes a Major Player in Industry

[Reference Photo]

As our society ages, the main customer base for companies is also changing. Instead of the traditionally strong purchasing power of the youth, middle-aged and elderly groups are gaining attention as major consumers. Automobiles, considered high-priced consumer goods, are a prime example.

Examining population by age group and new car purchase trends, the group most actively buying new cars this year is those in their 40s. They purchased 32.3 cars per 1,000 people. Those in their 30s bought 31.3 cars per 1,000 people. This is the first year the 40s have surpassed the 30s. Ten years ago, the number of cars purchased per 1,000 people was 35 for those in their 30s and about 30 for those in their 40s.

Consumer patterns for home appliances have also changed. In the past, products were developed and marketed targeting parents, children, and grandparents, but with the intensification of nuclear families, products for single-person or dual-income no-kids (DINK) households have increased significantly. Home appliances for pets are also a type that would have been hard to imagine just a few years ago.

Contraction in Service Sectors Including Telecommunications

Service sectors mainly targeting the domestic market have rolled up their sleeves to explore new overseas markets. The gaming industry, whose main customers are teenagers and young adults, inevitably views the domestic market negatively in the mid to long term. They actively establish overseas subsidiaries to target local markets or develop products with foreign users in mind from the start.

The same applies to IT companies whose main businesses are messenger services, search engines, and social networking services (SNS). Since platform businesses transcend national borders, they have already competed with foreign companies domestically. The expressions like “national portal” or “national messenger,” once commonly used, are no longer used because the user base itself is shrinking and it is expected that these platforms will find it difficult to maintain monopolistic status as before. The telecommunications industry, a key infrastructure sector where new entrants find it hard to compete, is also projected to see subscriber declines and potentially run deficits after 2050 if the current trends of low birthrate and aging continue.

Shipyard workers on their way to work
[Photo by Yonhap News]

Labor-intensive industries are facing urgent manpower shortages. The shipbuilding industry, one of the representative export sectors, is experiencing a rare boom in orders but struggles due to a lack of workers to build ships. The number of domestic shipbuilding workers is about 93,000, less than half of what it was ten years ago. In construction sites, the insufficient influx of young workers has led to issues with quality and safety. The government has revised policies to facilitate the influx of foreign workers, reflecting these circumstances.