April 4, 2023
SEOUL – South Korea has already entered into a “demographic onus” era under which the productive age population (15-64 years old) is less than the non-productive population (over 65 years old) due to the continually declining birthrate.
The total fertility rate of South Korea dropped to 0.78 in 2022, the lowest in the world, indicating the significance of a childbirth problem in Korea. The figure is significantly lower than the Organization for Economic Cooperation and Development average (1.59), France (1.79) and even Japan (1.3).
If we leave this problem unattended, Korea’s population is supposed to shrink to less than 50 million by 2045. In this respect, a devastating decline in the birthrate is a warning that Korea will face a demographic crisis leading to eventual extinction in the near future.
The Korean government has long struggled to cope with its low childbirth problem by investing more than 320 trillion won ($245 billion) over the past 17 years. However, such efforts have turned out to be failures, as demonstrated by the birthrate of 0.78.
Why is the younger generation unwilling to have children? One answer is closely related to their expectations about the society where they are supposed to live with their children. Han Byung-chul, a philosopher and the author of “The Burnout Society,” describes a “hopeless society” as one in which people “consume everything they can see, but do not have the time to think about who they are.” According to a recent survey by the STI research firm, those in their 20s and 30s are reluctant to give birth to a child due to reasons such as job security (21 percent), housing instability (20 percent), and child care expenses (27 percent).
From the perspective of a low birthrate, let’s take a close look at youth employment in Korea. Recently, the Korean government floated a workweek system of 69 working hours per week, arguing that by doing so, the younger generation could theoretically work more and then take time off for a longer period. However, contrary to government expectations, the majority of those in their 20s and 30s — called the “MZ Generation” in Korea and referring to millennials and Generation Z — tend to view this proposal as a regressive policy. Young people argue that such a labor system would actually worsen rather than alleviate the low birthrate.
As reported by foreign media outlets, Korea is widely known as a country of overwork, adding “gwarosa” (death by overwork) to the K-dictionary. As of 2021, the average annual working hours for Korean workers were 1,915 hours, the fifth-longest working hours among the OECD countries. Except for some developing countries in Latin America, such as Mexico and Colombia, Korea ranks first in the most working hours among the OECD countries.
How serious is this problem? Based on annual working hours, Korean people worked additionally 199 hours more than their peers in other OECD countries did. The differences in working hours get larger when compared to Japan (Koreans worked 314 hours more) and Germany (Koreans worked 566 hours more). In this fatigue society, it is impossible to ask the MZ Generation to work more hours without seriously disrupting their work-life balance. These facts clearly show why a policy of raising the cap on working hours to 69 hours per week will not help resolve the country’s low fertility rate.
Furthermore, the quality of employment for those in their 20s and 30s in Korea has been worsening. Korea’s youth unemployment rate of 6.4 percent is two times higher than its average unemployment rate of 2.9 percent. This difference suggests that the younger generation is struggling with structural unemployment. As of 2021, the total number of Korea’s non-regular temporary workers — including contract workers, part-timers and outsourced jobs — comprising about 38 percent of the total workforce, already surpassed 8 million for the first time in history. And there is the problem of the wage gap between non-regular and regular workers that is gradually widening. The average wage for non-regular workers was about 54 percent that of regular workers. The high unemployment of the younger generation and lower wages of temporary workers should be considered as part of the childbirth problem.
When it comes to housing security for the younger generation, we need to reform housing policies in a way that they will reinforce an inseparable connection among housing security, marriage and childbirth. To provide an environment where young people are willing to have children, the government should supply more public rental housing with better conditions and where young couples want to live. Then, how should we incorporate such a housing policy for the younger generation into a set of policies to address the low birthrate problem?
The first step is to restructure fundamentally the way of supplying public rental housing by introducing a “scale-up housing with childbirth” system. Under this system, a family could move to larger rental housing depending on the number of children they raise. The necessary condition for childbirth is to provide better housing conditions for newly married couples.
Second, the government should develop a new housing finance program targeted at the younger generation. This program should be designed to offer housing loans with a fairly low interest rate. The interest rate could then be programmed to get lower gradually according to the number of children a family has, thus eventually being converted into an “an interest-free loan” once a certain target (i.e., the third childbirth) is met.
Third, public rental housing should allow the younger generation to realize the dream of building their own houses. However, the current public housing policy seems to head in the wrong direction as it is centered only on rental housing. The government should provide the opportunity for the MZ Generation to own their own homes by increasing the share of rental housing supplied in the form of “sale after lease.” This is why I have made efforts to incorporate the “Home for Everyone” (Nuguna jib) project, which allows people to live for 10 years at a low rent, into the government’s housing policy.
The continually falling birthrate poses a serious problem, threatening Korea’s sustainability. It is important to integrate the voices of the young generation into feasible policies, along with their expectations about what the real problems are and about the future they are supposed to design.
Song Young-gil is a visiting professor at the ESCP Business School in France and an executive adviser to the Democratic Party of Korea. He is the former chairperson of the DPK. The views expressed here are his own. — Ed.