South Korea is an aging society. This is mainly a function of its low fertility rates and high life expectancy. According to recent statistics, South Korea has one of the lowest fertility rates in the world – lower than other aging societies (Taiwan, Hong Kong and Japan, for instance). Life expectancy is also significantly higher now than it was one or two generations ago: 66 years in 1980, it has increased steadily over the years, and is now 81 years.
According to the data, the elderly population (those 65 years and older) has tripled in size over the last 30 years. Ten years ago the elderly accounted for two out of every ten people. By 2040, this ratio will increase to three for every ten. The average age in 1980 was 26; it is forecast to exceed 40 this year.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
An aging society presents several immediate concerns for South. One of those concerns is how the state and the market will respond to South Korea’s quickly shifting demographic composition.
Rhyu Geon-shik of the Korea Insurance Research Institute has a pessimistic outlook. Quoted in the JTBC report, Rhyu says, “The poverty rate for the elderly in this country is number one in the world. The situation is quite worrisome. Inter-generational conflict surrounding welfare for the elderly is increasing, and more of elderly population is becoming refugees as they fall below the poverty line.”
As we’ve discussed elsewhere, the state and society are not very supportive of welfare state expansion. It would be expensive, and someone has to pay for it.
While the state is unwilling, the private sector is underprepared, according to findings by the Korea Chamber of Commerce and Industry (cited in the report). Even with the implementation of wage peak systems and retirement age extensions, the chamber believes businesses are not adequately prepared to deal with an increase in the population of retirees. A decrease in the number of able-bodied workers and an increase in the number of dependent, non-productive persons are going to challenge the financial soundness of many companies.
These challenges are not, of course, unique to South Korea. Welfare retrenchment, austerity, and bad finances are troubling the likes of Spain, Greece and Japan. But how, exactly, South Korea deals with the challenges of its aging society is a test of the state and society’s will to adequately care for some of its most vulnerable citizens.