It's winter in South Korea

Marcus Roberts
May 11, 2020
Reproduced with Permission

The demographic winter continues in East Asia. As well as Japan , the other democratic, Western-leaning allies in the region are all facing similar issues: very low fertility rates, low or negative natural population growth and rapidly ageing populations.

China is also grappling with these problems, although its demographic decline is not so advanced as some of its neighbours. For example, the latest population statistics out of South Korea show a country in advanced stages of population ageing.

According to the Korea Herald , the working-age population of South Korea (those aged between 15 and 64) declined to its lowest proportion of the population ever recorded (albeit those records only go back 12 years…) The 37.2 million Koreans in the working-age population bracket now make up only 71.8 percent of the total population. Since 2012 the working-age population has declined from its peak of 73.4 percent and shows no sign of slowing down.

The baby boomer bulge in the South Korean population pyramid is made up of those born between 1955 and 1963. These boomers still belong to the working aged population, but from this year they will start to turn 65 years old and thus, in the next few years the working-age population will dramatically decline.

The official South Korean statistics office predicts that within four years the working aged population will be less than 70 percent and will have dropped below 60 percent in 2036 and below 50 percent in 2050. By 2065 the senior population (those aged over 65) is predicted to overtake the working-aged population (46.1 v 45.9 percent of the population).

At that stage the population pyramid will have become inverted and any government expenditure schemes that are relying on increasing numbers of taxpayers coming through (like a Ponzi scheme) will really start to feel the pinch. Other demographic observers think that these official predictions are far too sanguine.

The population pyramid is already starting to look top heavy – currently there are one million more Koreans aged 60-79 than there are aged 0-19. As the upper end of the population starts to die in greater numbers, the natural growth of the South Korean population (a mere 8,000 in 2019) will start to decline. There are simply not enough babies being born to replace those about to die.

In 2019 the total fertility rate reached 0.92 children per woman, well under half the 2.1 rate needed for population replacement. This is an extremely low figure, and the fertility rate trend since the early 1990s, when such figures were first recorded, has only been down. In 1993 it was 1.654, 20 years later it was only 1.187 and only six years later it has dropped another 0.26.

These figures have resulted in South Korea having the steepest decline in its youth as a proportion of its population in the OECD.

But it is also important to note that for over 25 years the fertility rate has been below replacement. A whole generation has grown up in a society which is not reproducing itself. Thus the example of big families, or families generally, is not as widespread.

Further, the economic barriers to family life become greater – society and the economy become less geared towards those trying to raise a family. Demographic researchers thus point to the younger generation avoiding marriage and children due to a tough job market and high apartment prices, especially in Seoul and the surrounding Gyeonggi Province. One can only imagine that that job market will become more difficult in the years ahead…

But, so what? Why should we care that so many countries, especially in East Asia, have low birth rates, declining populations and are rapidly ageing?

Well, there are the economic effects. South Korea is the 12th largest economy in the world – its growth is not unimportant to the rest of the world. But population ageing and decline will create another headwind to GDP growth – some argue to the tune of 0.5 percent per year. Such worldwide concerns are magnified for China and Japan of course.

What about social security schemes? Or huge amounts of government debt? How are they to be paid for when the number of taxpayers are declining either as a proportion of the population, or even in absolute terms? Then there are the geopolitical concerns – the USA relies upon these East Asian democracies (Japan, South Korea, Taiwan, Singapore etc) to help it project power into the region and to help keep the current international status quo in the region. Anything that weakens these nations (and demographics are important for the economy and for harder power, like military manpower) has larger geopolitical implications. (And of course, China's demographic woes are important for the same reason.)

But finally there are spiritual and societal concerns – just what does it mean for a society to go for decades and generations without reproducing itself fully? When having a child, let alone children, becomes rarer and society, the economy and businesses are less likely to cater for families.

What happens when wider family bonds disappear as cousins, uncles and aunts become less widespread? What happens when a generation becomes more focussed on themselves than the future or their children because, for whatever reason, fewer of them are having children?

Well, I guess we will find out in the next few years.

Whether or not you think any of this is a good thing or not, we cannot pretend that this demographic shift is not a major world event that needs to be brought to light and debated. This is in large part the reason why we write this blog.