Seoul, November 22:

The South Korean government today outlined plans to transform and open up its economy to meet the threat posed by a low birthrate and ageing population.

Finance and Economy Minister Kwon O-Kyu also vowed to make the nation one of Asia’s top three financial hubs by 2015, along with Hong Kong and Singapore, and to end confrontation between unions and management. Highlighting the task ahead, the militant Korean Confederation of Trade Unions called a strike today affecting tens of thousands of auto workers and others. And thousands of activists protesting a planned free trade deal with the US took to the streets.

US investment fund Lone Star has meanwhile hinted it may terminate a deal to sell the South Korean bank it bought in 2003 following months of legal problems.

Kwon, in a speech to the European Chamber of Commerce in Korea, said low fertility and population ageing were making it harder to expand labour input and capital accumulation, the formula for the dramatic economic growth of past decades. “Low fertility and population ageing will in the long term increase pension expenditure and medical cost, posing a threat to long term fiscal soundness and sustainable development,” he said.

In a report the National Statistical Office said the population will start to decrease from 2020 after peaking at 49.34 million in 2018. People aged over 60 would account for more than 14 per cent of the total by 2018.