Aging population and policy challenges
It is well known that Korea’s population is aging at a rapid pace because of its birthrate being the lowest in the world at 1.17 in 2016, and its lengthening life expectancy.
According to the United Nations’ projection, given the current birthrate and the aging speed rate, Korea’s total population will fall from 50 million in 2015 to 39 million in 2070.
This will in the long term have considerable effects on our economy and society as a whole.
It is expected to push the economic growth rate down to the zero percent range within 10 to 20 years.
As the effects of a declining working age population are reflected in the long-term trend of inflation, inflation is projected to fall into the 1 percent range within three to four decades.
This is also expected to result in a substantial increase in government expenditure and a reduction in tax revenue.
The country’s aging population will also impact on the financial, foreign exchange, housing and labor markets, as well as the industrial structure of the economy as a whole.
Over the past 10 years, the government has made great efforts to ease its aging population by adopting a variety of policy instruments and injecting huge financial resources.
However, I think the accomplishments are still insufficient.
It will take time — around a generation — for policies to be effective in response to a low birthrate and aging population.
If measures are not implemented steadily at the right time and in the right direction, it will have irreversible consequences for our future generations.
I believe that we need to deal with the following policy challenges seriously in order to achieve sustainable economic growth and have a healthy and balanced economic structure for our society going forward.
Suggestions
First, it will be necessary to shift our population policy from a welfare-oriented to a childbirth-focused one before it is too late.
The government needs to establish and carry out policies by eliminating one by one the factors that are behind the reduction in the birthrate.
What is most important in putting this into practice is to reform the social and economic incentive mechanism in a way that encourages childbirth.
Second, an immigration policy needs to be given a serious thought.
An influx of skilled labor needs to be actively encouraged, as one way of strengthening the potential to achieve sustainable growth through a qualitative improvement of the labor force. An immigration policy needs to be pursued carefully, however, in consideration of the problem of youth unemployment and the issues of social and cultural inclusion.
Third, the government’s role as a control tower implementing these policy measures effectively needs to be strengthened.
A government body that deals with our aging population needs to have decision-making, budgeting and executive authority.
Following Japan, which has appointed a minister to tackle the low birthrate so as to maintain the population at 100 million, Korea also needs to establish stronger policy governance.
Last but not least, we have to keep in mind that it requires a far-sighted perspective to tackle the population issue.
There is a saying: “Education is a 100-year plan.”
This is used frequently to stress the importance of education as the cornerstone for a society’s development.
Our population issue, however, should be approached through an even longer period — a “1,000 year plan.”
This is because it is directly related to the very survival of our own and our future generations.
I hope that our population issue will no longer appear on the national emergency policy agenda for the next generation.