◇ The National Economic Advisory Council held its 3rd 2002 National Economic Advisory Council on May 28 (Tuesday).

• With Deputy Prime Minister and the Minister of Finance and Economy, 19 advisors including principles of four economy boards and the Ministers of Welfare and of Labor present, the issues regarding 'The Aging Society: Its Economic Effects and Policies' prepared by KDI were discussed.
  
  - Discussions and results from this meeting will be reflected in the relevant mid- and long-term policy making of the government in the future.

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The ratio of population over 65 years of age to the entire population as of 2000 is 7.2%, and it is expected to grow to 14% in 2019. This rapid growth of aging population is so far unprecedented in the world.

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As the aging society further expands, the working-age population and the number of employees are expected to decrease and consequently, it may cause a slowdown in the economic growth.

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Since the propensity to save incomes is lower for the aged than the younger generation, the savings rate of the population is expected to decrease as the aging society progresses.

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The bond investment, which is relatively safer than stocks, is increasing in the capital market, in which changes are anticipated due to the increasing size of pension fund. (14% to GDP in 2001 a 44% to GDP in 2020.)

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Whereas the slowdown of the economic growth decreases government revenue such as tax and social security revenues, the increase of pension and health expenditures for the old will raise government expenditures.

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The silver industry is expected to develop further in areas such as of health, medical care and welfare services with diversification, and industry specific for leisure and housing for the aged will also grow in parallel.

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To secure sustainable growth of the aging society, mid and long term improvements of the system, such as reforms in the social security system including pensions, labor market reforms and active labor market policy, stabilization of the capital market and balanced public finance are essential.

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For the labor market, extension of employment promotion such as prohibition of mandatory retirement based on age while creating effective programs to improve job skills and opportunities for the aged are needed.

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For the capital market, ensuring appropriate income at old age through enhancement of operational profits and the long-term savings such as pensions, and efforts to improve transparency of the pension fund management are necessary. This in turn will allow soft-landing of the pension fund in the capital market and help setting up principles for pension fund investment.

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For fiscal policy, fiscal consolidation and alleviation of fiscal burden through tightening government expenditures are recommended.

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In terms of policies for women, the decline of labor force in an aging society can be alleviated and the fertility rate should be raised by women's participation in the economic activity through removing obstacles such as the "double-standard."