South Korea is facing significant demographic and economic challenges as its birth rates fluctuate and economic sentiments dip. This narrative intertwined reflects the broader struggles of modern society as family planning and economic stability collide.
Recent statistics from South Korea provide both troubling news and glimpses of hope. According to data from Statistics Korea, South Korea recorded its highest growth rate of births—10.1%—in September compared to the previous year, with 20,590 babies born. This marked the largest monthly increase seen since January 2011. Interestingly, this surge follows five consecutive months of rising marriage rates, hinting at the connection between social factors and family planning decisions.
Despite this, the overall fertility rate remains disconcerting. South Korea's premier fertility rate dropped to 0.72 at the end of 2023, one of the lowest globally. Experts have repeatedly highlighted the below-replacement level of 2.1 as necessary for maintaining population stability—this disparity poses long-term economic and social concerns.
Young couples often cite economic instability, high housing prices, and the need for career advancement before having children. Both high costs and societal pressures weigh down on prospective parents. The combination of high housing and education costs, gender inequality, and the pressure to achieve workplace stability keeps many from starting families.
Hwang Hee-jin, the head of the statistical survey team at the Bank of Korea (BOK), expounded on the negative ramifications of the demographic crisis during the BOK's November Business Survey Index. The Composite Business Sentiment Index (CBSI) for all industries fell to 91.5, indicating widespread pessimism among business leaders. Manufacturing sentiments were particularly harsh, reflecting deep-rooted concerns about export declines and supply chain issues following the recent U.S. elections.
While the non-manufacturing sector saw slight improvement, the overall outlook remains precarious. Hwang warned, "the semiconductor sector continues to experience differentiation across subsectors, and competition intensifies within various industries, contributing to dampened sentiments. The anticipation of declining exports looms large over manufacturers.
On the residential front, South Korea's government is acknowledging the crisis. President Yoon Suk Yeol has instituted plans to address the low birth rate, which he has classified as a national emergency. Initiatives have included monetary incentives for newborns and parental support policies intended to bolster work-life balance for families. This includes raising cash allowances for newborns, which reached around $750 per month at the year's start.
Further, the Presidential Committee on Aging Society and Population Policy has embarked on efforts to create family-friendly work cultures, tax incentives for small businesses, and support financial policies aimed at supporting potential parents. Yet, there remains skepticism about whether such measures will effectively increase birth rates.
While births have risen for the third consecutive month, many remain cautious about viewing this as a long-term solution. The spectre of demographic decline persists. Current projections postulate South Korea's population may plummet from 52 million today to around 36 million by 2072, with nearly half of the population being elderly at this time. This stark reality casts doubt on the sustainability of current economic policies if not fundamentally reformed to support families.
Despite these challenges, the potential for change exists. By addressing the root causes of declining birth rates and supporting young families economically, South Korea can begin reversing the trend. This societal change hinges not only on government policy but on creating a cultural shift where family and parenthood are valued alongside career achievements, allowing people to have both—a family and fulfilling professional lives. Without this fundamental shift, the country may struggle to accommodate the long-term economic ramifications of its rapidly aging population.