South Korean President Yoon Suk-yeol officially declared a “national population emergency” a week ago, stating that the country will operate a comprehensive national response system “until the day the low birth rate problem is solved.” Measures to address this crisis include significant adjustments to policies targeting low fertility rates, with Seoul, the city with the lowest birth rate in South Korea, planning to increase the elderly welfare standards to those aged 70 and above.
On June 19, Yoon Suk-yeol stated at a conference he hosted on the challenges of low birth rates and an aging society: “South Korea’s most fundamental and lethal problem currently is the population crisis caused by ultra-low birth rates.” He pointed out the example of Ancient Sparta, which entered a path of decline due to a population decrease despite having enjoyed its strongest peak, providing insights for South Korean society today.
During the conference, Yoon Suk-yeol unveiled the latest response plan which includes substantial adjustments to policies targeting low birth rates.
South Korea’s previous measures to address low birth rates have been criticized for lacking specificity. Despite investing over 380 trillion Korean won (approximately $270 billion) in countermeasures against low birth rates, the decline in birth rates has not been halted.
This new policy primarily focuses on achieving a balance between work and family, improving the environment for raising children, and addressing housing issues. The goal is to see a rebound in the birth rate within Yoon Suk-yeol’s remaining three years in office, aiming to restore the total fertility rate to the level of “1” by 2030. The total fertility rate refers to the average number of children a woman is expected to give birth to in her lifetime.
Addressing issues related to balancing work and family life, Yoon Suk-yeol has decided to increase the current 6.8% rate of male childcare leave utilization to 50% during his term, with childcare leave wages being increased to 2.5 million Korean won (approximately $1800) per month for the first three months.
Paternity leave for men has also been extended from 10 days to 20 days. Additionally, the age at which parents can shorten their working hours during the childcare period has been raised from children under 8 years old to children under 12 years old. A new childcare leave system allowing for a 2-week short-term leave will also be introduced. Moreover, businesses will receive 1.2 million Korean won (approximately $860) per month to support those on childcare leave as replacements for manpower.
Regarding childcare policies, Yoon Suk-yeol mentioned a shift towards public nursing care provided by the state, aiming to establish a national responsibility system for children aged 0 to 11 during his tenure. As part of this, free education and care for 3 to 5-year-old children will be implemented within his term.
In addressing housing issues for existing families with children, it has been proposed that these families be given priority in purchasing desired homes, with increased opportunities for additional purchases and a higher allocation rate for newborns.
Additionally, low-interest loans for housing purchases and rental funds will be provided to newlywed couples, with expanded preferential rates for each childbirth. This will be accompanied by reductions in marriage tax and an expansion of child tax exemptions.
South Korea’s total fertility rate dropped to 0.72 last year, hitting a new historic low.
A total fertility rate of 0.72 means that for every 100 couples (200 people), the number of children is only 72. This signifies a one-third decrease in population from parents to children.
The replacement level total fertility rate required to maintain a population is 2.1. Since declining below this standard in 1983, South Korea has not managed to recover. The rate dropped below 1 in 2018 and has continued to decline. Since 2020, deaths in South Korea have exceeded births, resulting in a natural population decrease for four consecutive years.
South Korea’s total fertility rate has been ranked at the bottom among OECD countries for 11 consecutive years since 2013. Currently, it is less than half of the OECD average of 1.58 (as of 2021), making it the only country among OECD members with a total fertility rate below 1.
The situation has worsened this year. According to data from the Korean Statistical Office, the total fertility rate for the first quarter of this year was 0.76, a decrease of 0.06 compared to the first quarter of 2023 at 0.82. This marks the first time since quarterly statistics began in 2009 that the first quarter total fertility rate has fallen below 0.8. Given that the first quarter typically records the highest number of newborns in a year, there are concerns that the total fertility rate for 2024 may drop below 0.7.
The high cost of raising children is considered a major factor contributing to the decline in birth rates. In March of this year, the Korea Population Health Welfare Association released the results of a public opinion survey conducted among 2,000 individuals aged 20 to 44, revealing that 96% of respondents acknowledged that “the cost of raising children is very high.”
In South Korea, a significant portion of the cost of raising children comes from private tutoring fees. The private education fee statistics released by the Ministry of Education and the Statistical Office of Korea show that despite a decreasing student population, expenditure on private tutoring for elementary, middle, and high school students in South Korea reached 2.71 billion Korean won (approximately $1.95 million) in 2023, marking a third consecutive year of reaching new peak values.
An analysis report published by the Korea Economic Cooperation Association in 2023 indicated that an increase in actual monthly private education fees by 10,000 Korean won (about $7) could lead to a reduction of approximately 0.012 in the total fertility rate, constituting 26.0% of the reasons for the decline in birth rates.
Furthermore, high housing prices also contribute to the burden of raising children. A recent report from the Korea Research Institute for Human Settlements highlighted housing prices as one of the reasons for South Korea’s low birth rates. The analysis suggested that a 1% increase in residential transaction prices could lead to a decrease of 0.00203 people in the birth rate in the following year.
A report released by the Bank of Korea in June this year indicated that South Korea’s housing costs last year were 23% higher than the average for Organisation for Economic Co-operation and Development (OECD) countries. In Seoul, it would take over 25 years for middle-income families to buy their own homes, requiring more than 10 additional years of work compared to cities such as New York, Paris, and London known for expensive housing costs.
The report also revealed a steep rise in Seoul’s housing prices starting in 2014 relative to income levels. In 2013, it took approximately 10.4 years for a middle-income family to purchase their home; this increased to 13.5 years in 2014, rising to 17.8 years by 2017, and escalating to 20 years by 2019.
In South Korea, property owners are required to pay comprehensive real estate taxes, with an additional tax called a “wealth tax” (only found in South Korea globally) imposed on owners of properties valued above a certain amount, on top of basic property taxes.
The comprehensive real estate tax was introduced during the administration of President Roh Moo-hyun in 2005 and has since sparked criticisms of sharp increases in real estate prices and double taxation disputes. Particularly, the administration under President Moon Jae-in starting in 2017 significantly expanded the taxation coverage and revenue of this tax, yet real estate prices have not stabilized and have instead continued to soar.
According to statistics from KB Real Estate, the average transaction price of Seoul apartments doubled from January 2018 to May 2022 during the final term of President Moon Jae-in, while the average transaction price of national apartments increased approximately 1.7 times during the same period.
Currently, voices from both sides of the South Korean parliament are calling for the abolition of the comprehensive real estate tax. President Yoon Suk-yeol also noted that the sharp rise in housing prices during President Moon Jae-in’s administration was “due to neglecting the principles of the real estate market, and taxes should be levied within the range that does not distort market order.”
South Korea’s globally lowest fertility rate is also believed to be associated with historical birth control policies that were implemented.
Following the Korean War, the population of South Korea began to rise rapidly, with a fertility rate as high as 6 in 1960. Starting from 1962, the South Korean government advocated for family planning due to concerns that uncontrolled population growth could hinder rapid economic development. The family planning program continued until 1996 when the fertility rate had already dropped to 1.57.
While South Korean government initiatives to prevent declining birth rates were only established starting in 2005, the country has seen a continuous decline in population indicators. Although there have been slight fluctuations in birth rates since then, the decline has been consistent since 2016.
As birth rates continue to decline, South Korean society is facing increasingly severe aging trends. According to a survey by the Ministry of Administration and Security in 2023, the total number of people aged 70 and above in South Korea surpassed the total population of those aged 20 to 29 for the first time.
With the aging trend intensifying, calls to raise the standard age for senior citizens have grown louder in South Korea. The government is considering proposals to increase the age standard for seniors, with Seoul taking the lead in raising the eligibility age for various elderly benefits from 65 to 70 and above.
Seoul is currently the city with the lowest birth rate in South Korea, with a total fertility rate of only 0.55 last year. By 2026, two years from now, the population of people aged 65 in Seoul is expected to exceed 20% of the total population, marking the city’s transition into a super-aged society.
Due to factors such as population decrease, Seoul expects to see a foreseeable reduction in tax revenue and an increasing elderly population, leading to fiscal burdens. As a result, they have decided to establish flexible criteria based on different welfare items for seniors according to their age standards.
Starting as early as next year, Seoul plans to apply the new standards to new welfare benefits. However, existing welfare benefits such as free subway rides for the elderly will not be affected by these new rules, considering potential opposition from the elderly population.
The results of a survey conducted in 2023 by Seoul targeting 3,100 individuals aged 65 and above showed that respondents believed the average age for seniors should be 72.6 years.
The proportion of employed individuals aged 70 and above in South Korea is also on the rise. According to data from the Korea Statistics Portal website KOSIS and integrated microdata analysis, as of January this year, the percentage of the total population of employed individuals aged 70 and above in South Korea increased from 5.1% in January of last year to 5.6% this year. Among those aged 70 and above, 24.5% are still working.
Last year, individuals aged 70 and above were primarily working in agriculture, forestry, and fisheries (30%); health and social welfare services (22.8%); and public administration, defense, and social security administration (7.6%).
These measures highlight the complex challenges faced by South Korea in tackling its low birth rate and aging population, with various strategies being considered to address the multifaceted factors influencing the country’s demographic trends.