South Korea must strive for greater social economic mobility and creativity if it wants to overcome the myriad of challenges in its path, a report by a state-run think tank said Sunday.

The report titled "Mobility and Creativity - the Keywords to Structural Reforms" claimed that rising frustrations among the youth, who are hard pressed to find good jobs, and drops in corporate earnings all stem from structural problems in Asia's forth largest economy.

The Korea Development Institute paper stressed that how the country tackles these issues will determine if its makes the next leap forward or follow in the footsteps of countries like Japan, which has suffered 20 years of lost growth.

"The prevailing view is that the current problems, such as those in the job market, are due to a rise in the country's retirement age and spike in number of children of the baby boomers entering the workforce, but there are more deep rooted weaknesses,"

Kim H-sam, the director of KDI's human resources policy department, said.

He stressed that optimism that a drop in the country's general population will resolve all the country's problems may not be enough, as the demand for labor may take a hit if South Korea's growth potential dips and it is unable to keep pace with technological innovations taking place globally.

The chief researcher warned that South Korea is approaching a crucial juncture in its development where effective structural reforms can allow it to move forward or become mired in very little or minus growth.

"Japan and Italy have struggled to make the transition, while Germany, after its own lost decade, has done so and managed to maintain fiscal balance and its global export market share," Kim said.

Japan and Germany lost export market shares, yet Germany has been able to fare better. The European country also has been able to keep its government debt at 70-80 percent of its gross domestic product, while numbers for Japan have reached 250 percent levels.

On changes that need to be made on the mobility front, the researcher said actions must be taken to carry out structural reforms of failed businesses, end excessive protection for workers and fuel greater flexibility in the job market.

In the creative sphere, the country must encourage new thinking and ideas that can be mated to productivity.

This is doubly important because rivals such as China, which enjoys a price advantage, have emerged as a key competitor for South Korea on the global market.

To bring about greater mobility and creativity, the country must shed many of its past practices and seek more openness and freedom.

In addition, the country as a whole must learn to communicate more with the leadership, in particular, needing to show it is sincere about bringing about change that can benefit the general public.

The KDI researcher then said the country's education system, in particular, needs to be revamped so as to create future workers who can be constructive and creative members of society.

"Emphasis on early education is another form of cramming that does nothing to enhance creativity," he argued.

He pointed out this kind of educational system has caused many South Korean university graduates to find work in non-major related fields. The researcher said this is a waste of time and does nothing to improve creativity.

Kim recommended that even in the educational field, more must be done to innovate the way classes are taught, with teaching positions becoming more open outside talent, and more freedom to teach courses that can give students wider perspectives aimed at spurring creativity and competitiveness. (Yonhap)