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North Korea Can’t Solve South Korea’s Demographic Crisis

 
 

For decades, the population of South Korea has grown. In 1960, South Korea’s population stood at just over 25 million; it has steadily risen over the ensuing decades to over 51 million today. However, that trend will reverse in the years ahead.

According to the UN’s latest State of the World Population report, South Korea’s total fertility rate of 1.3 remains well below the replacement rate of 2.1. The fertility rate first fell below the replacement level in 1983 and in recent years has fallen behind Japan to become lowest fertility rate in the world. As result, South Korea’s population is rapidly aging. In 2017, South Korea’s elderly population for the first time was larger than those under the age of 14, while those in the workforce over 60 now outnumber those in their 20s.

Early indications are that the fertility rate may fall to below 1.0 for the first time for 2018, with little prospect for an increase in the future. A recent analysis of social media found that the economic burden of children, concerns about the lack of spousal help in raising children, and the interruptions to women’s careers hinder childbirth. If current trends persist, population projections by Statistics Korea suggest that South Korea will see its population peak at just under 53 million in 2031 and then decline to 43 million in 2065.

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The continued decline in South Korea’s total fertility rate has long-term implications. As the number of children continues to decline, schools will need to close or be consolidated. In time rural city administrations may need to be merged.

Already faced with some of the highest levels of old age poverty in the OECD, South Korea will face a rising strains on its finances to pay for an aging population with fewer young workers to bear the burden.

As the population begins to decrease, South Korea’s potential economic growth rate will also begin to decline, eventually falling below 2 percent. According to a recent report by Moody’s Investment Service, the effects of lower economic growth and increasing debt will begin to impact South Korea in the 2030s, with implications for South Korea’s long-term sovereign credit and fiscal strength.

The consequences of a declining population extend beyond South Korea’s economic prospects. South Korea currently has one of the world’s largest militaries with just under 600,000 troops. However, as the number of young males eligible for military service shrinks, South Korea will be pressed to maintain its current military structure and military budgets will likely increasingly come under pressure as costs shift to dealing with South Korea’s aging population.

While the population of North Korea is younger than the South, unification with North Korea is unlikely to solve South Korea’s own demographic challenge. Similar to South Korea, the North has begun to see its birth rate decline and fall below replacement level. In 2014, the UN reported North Korea’s total fertility rate to be 2.0, just below the replacement level, but its birth rate has slowly declined as well and is now 1.9.

If East Germany is a harbinger of what is to come, unification might only accelerate the demographic challenges in both the North and the South. East Germany was already seeing a decline in births prior to reunification, but births in the former East Germany rapidly declined after unification, falling to below 0.8 births per woman.

The birth rate in the former East Germany did eventually catch up to that of West Germany in 2011 and the Länder (provinces) with the highest fertility rate remain the states of former East Germany. However, the higher fertility rate near 1.6 in some of the former East German Länder remains below the replacement level of 2.1, and similar to that from other German Länder according to the Federal Statistical Office of Germany.

While German unification occurred through the collapse of the East German state, the two Koreas could hope for a more orderly process that might stave off the rapid decline in births that East Germany saw after unification. However, there is little indication that one could expect birth rates in the North to increase significantly once unification or economic integration occurred, leaving both halves of the Korean Peninsula with birth rates below the replacement level of 2.1 and the prospect of a declining population.

Immigration is one potential solution to South Korea’s demographic challenges, but the type of mass migration needed to address the current demographic trends is also unlikely. More likely the answer lies in mitigating the some of the long-term trends with a combination of limited immigration, increased integration of women into the workforce, and reforming policies to address some of the issues discouraging young Koreans from having children, such as improving child care options and reducing the financial burden of having children.

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