South Korea’s rapid ageing is the culmination of two key factors. First, South Koreans are living longer. Between the end of the Korean War in 1953 and 2014, life expectancy in South Korea jumped from 48.2 to 81.9 years, according to UNWPP data. At the same time, the country’s birth rate plunged from 38.0 births per 1000 population in 1953 to just 9.1 births per 1000 population in 2014.
An inexorable consequence of this sharp increase in life expectancies and plunging birth rates is that at some point, total population will start to decline. The UNWPP projects that South Korea’s population will peak at 52.7 million in 2035, up from 50 million in 2014, before declining steadily at least until the end of this century.
South Korea’s rapid demographic transition will have major fiscal, economic, social and security implications.
From 1995 to 2013, healthcare expenditure in South Korea rose from 3.8 per cent to 7.2 per cent of GDP, World Bank data reveals. As the population ages, healthcare expenditure is bound to rise further, straining public finances. Fiscal sustainability could be achieved by increasing taxes and/or scaling back other government programs to finance rising healthcare expenditure. But this would be politically difficult.
As South Korea’s total population declines, the workforce will also shrink, curbing economic growth unless there are simultaneous gains in labour productivity. The UNWPP expects that South Korea’s working age population (consisting of workers aged 15 to 64) will peak in 2016 whereas the core workforce (consisting of workers aged 25 to 49) already peaked in 2009. Meanwhile, OECD data indicates that South Korea’s labour productivity growth has been on a downtrend since hitting a peak in 1983.
To forestall an imminent decline in the workforce, the South Korean government will raise the current retirement age from 55 to 60 in 2017. It is also considering raising the retirement age for civil servants from 60 to 65. By enabling older workers to continue contributing to the economy, the government hopes to sustain economic growth while reducing the tax burden on the shrinking younger population.
But there are concerns that there may not actually be enough jobs for the growing number of older workers. And intergenerational tensions may heat up if the younger population sees an increase in the retirement age as an obstacle to their own job opportunities.
South Korea’s demographic crisis will also impact the country’s national security. South Korea is technically still at war with the North. Data released by the South Korean Ministry of National Defense (MND) shows that South Korea spent on average 2.4 per cent of its GDP on defence between 2011 and 2015.
Ageing, if it leads to a weak economy, might compel the South Korean government to reduce its already modest military expenditure further. And a shrinking population will invariably result in a reduction in military manpower since the South Korean military is mostly made up of 18 year-old male conscripts. UNWPP data indicates that the number of 18 year-old males peaked in 1991 at 465,000. By the end of this century, this will fall to just 176,000 — a whopping 62 per cent decrease from its peak.
To defuse the impending demographic crisis, the South Korean government is looking to technology. For instance, it wants to see one robotic device in every household by 2020 to help ease the burden of elderly care and boost the country’s female labour participation rate. South Korea already has the world’s highest robot density. In 2014 there were 478 robots per 10,000 workers, according to the International Federation of Robotics. But the country is set to leverage on automation even more.
To cope with the dwindling number of young males available for conscription in the years ahead, the MND is planning to downsize from 633,000 personnel to 522,000 personnel by 2022, while making up for the deficit with additional career soldiers. It is also deploying autonomous weapon systems and robotic sentries to further reduce the military’s dependence on manpower.
Other ministries are similarly taking steps to defuse the country’s looming demographic crisis. The high cost of education, youth unemployment and social norms that disadvantage single parents are now being targeted to raise the country’s dismal birth rates.
There are also mounting calls for the country to welcome back overseas Koreans and to even look to immigration to increase the population. Mindsets in South Korea are slowly changing and the country has demonstrated in the past an incredible ability to overcome great adversity. When the dust finally settles, a more dynamic South Korea might just emerge from this crisis.
Lee Sang Ok is a deputy director at the Ministry of National Defence, Republic of Korea. Tan Teck Boon is a research fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.
The views expressed are those of the authors and do not reflect the official policy or position of the Korean government or the Ministry of National Defence, Republic of Korea.
A version of this article was first published here by RSIS.
Japan encouraged their citizens living in Brazil to return to Japan as one way to at least slow down its declining population. Those who did go back found that they could not comfortably and effectively reintegrate back into their former homeland. Their language skills were lacking and they found it difficult to adapt back to slome features of Japanese culture and societal expectations.
Would returning S Koreans have a similar experience?
What can the government do to boost the birth rate of women of childbearing age: tax incentives, longer maternity leaves, etc?
The number of foreign residents in S Korea is growing. Can they help boost the population? Will the Korean people readily accept them?
It seems that just about every country in the world is having declining birthrates and an aging population. Of course, you have people saying that due to automation, you won’t need so many workers; however, you will still need people to work which includes taking care of an aging population. I don’t know if having more residents from other countries will partially solve the problem since as I stated the foreign residents have declining birth rates in their own country of origin.
Why don’t they hire the South Korean kids giving them full-time jobs and benefits? There was an article in September 2015 about the discontent of the South Korean youth and their high unemployment rate.
The problem could be readily solved by employing women. Many of my over-educated friends would really like to work, but they cannot gain employment because of sex and age discrimination. Companies and agencies need to expand their minds a bit and recognize what women and middle aged women could offer.
The problem exists in the USA where kids can’t gain employment because they are over educated, ill-educated, or because the companies want to bring over foreign workers. For Americans over 50, it is because of age discrimination and American companies don’t want to paid the proper wages for all that work experience acquired by the 50+ year old Americans o African-Americans can’t get hired because of their race and American corporations have resort to temporary or part-time jobs with little or no benefits and no chance for full-time employment. Finally, American corporations don’t want to invest in America anymore.
You made an excellent point there, Gunther. Companies have an important role to play in this issue. Unfortunately, many tend to extract rather than create value thus compounding the problem. Going forward, the key is re-aligning the interests of the corporate world to complement development.
You are right Tan Teck Boon about companies playing an important role no matter what country they are located and we need better corporate leaders to re-align their companies interests or if they won’t, they need to be either well-regulated by the government or be stripped of their business licenses and be dissolved. If they complain about it, we will just tell them that a business license is a privilege, not a right just like a driver’s license.
Japan has managed quite well. Japan is still the largest creditor nation. Why can’t Korea?
Merger with North will boost population to 80 million.
Increasing working age from 15-64yrs to 15-70urs will add millions of workers.
An older Korea will be gentler, less warlike.
Women will benefit in health and wealth.
Per capita land, water, minerals will rise.
Pollution and environmental damage will end.
A unified Korea with 8 million people instead of overpopulated 80 million is not too bad a proposition.
I don’t really think that this is a real problem.
1.there isn’t really a threat to the South Korean culture, since the index of ethnic fractionalization in South Korea is 0.002, This means that the people living in South Korea are 99.8 percent South Korean.
2. South korea is small country with a population of 51,164,435 people, so the population density is 503 people per square kilometer, which is considered to be quite densely populated. This leads me to believe that the reduction in the populaion would be a good thing
I used this site http://www.confiduss.com/en/jurisdictions/south-korea/demographics/ as a source for my facts so some of the numbers might have changed.
P.S. Great article 🙂