Korea’s Baby Crisis

All across Asia,

in a stunning reversal of history, birth rates are falling at a startling rate

in the most-developed economies. But nowhere on earth is the birth rate falling

faster than in one of the region’s most vibrant economies – South Korea.

South Korea’s birth rate is now the lowest in the world, only 1.08 babies per capita,

far below replacement rate.

Given the country’s high premium on economic

success, it is couples at the bottom of the economic ladder who are giving up

having children. According to a study by South Korea’s Hangyang University

Institute of Population and Aging cited in the Korea Times, couples with

elementary school backgrounds had an average 2.63 children prior to the

1997-1998 Asian Financial Crisis. After the crisis, they gave birth to just

0.14 babies per couple, about one-twentieth the previous average.

South Korea’s demographic crisis has given birth to a wide range of studies as the

government, universities, non-government organizations and others seek to

discover what is going on. One of the

most exhaustive, titled “The Aging of

Korea: Demographics and Retirement Policy in the Land of the Morning Calm,” was

released last week by the Washington, DC-based Center for Strategic and

International Studies with the sponsorship of the Korean arm of MetLife, Inc.,

the New York-based insurance behemoth.

And, while it is obvious that MetLife, one of whose major products is

the sale of retirement packages, has an axe to grind, the report still offers a

clear and comprehensive look at Korea’s demographic makeup, and what it finds

is troubling.

Although South

Korea is still a demographically youthful nation, the

54-page report says, “with life expectancy rising and birth rates plumbing

record lows, Korea

is about to undergo a stunning transformation.” By 2050, along with Japan, Italy

and Spain,

it will be one of the oldest countries on earth, with an attendant crisis in

how to take care of the aged. (Across the border in North Korea, by contrast they are

having plenty of babies. According to the CIA World Factbook, women in North Korea

are giving birth to 2.1 babies per capita.)

Korea is hardly alone, although no other society on the planet at a

similar stage of development faces an “age wave” as massive as Korea’s,

or one that is approaching as fast. According to a UN Population Division World

Fertility Report in 2005, China’s

strict one-child family policy has produced the most dramatic drop in

fertility, but that was driven by coercive government policy. Some 20 countries

across the world now have fertility rates at or below the level to sustain the

current population. In Asia, they are China,

Hong Kong, Macau, South

Korea, Singapore

and Thailand,

according to the UN study.

But a sequence of factors combine to make Korea

a special case. “Despite the breathtaking economic growth of recent decades,”

according to the CSIS report, “Korea

in many ways remains a traditional society with a traditional understanding of

social roles. Workers are expected to retire early from formal employment. The elderly are expected to live with and be

supported by their extended families. Women who marry are expected to quit

their jobs.”

These conditions have simply made it

unattractive for many Koreans to raise a family. According to a study by the

Presidential Committee on the Ageing Society and Population Policy and the

Korea Institute for Health and Social Affairs, only 16.8 percent of teenagers

say people should get married at all. Only 27 percent said they should have

children. Fewer than half of all girls said it is better to get married than to

stay single.

In addition, South Korea put together an

extremely effective family planning program in the 1960s and 1970s, in which

planning agents visited rural areas to pass out birth control information, a

campaign that drove down the annual population growth rate from 3 percent in

the 1950s to 1.9 percent by 2003. Under

the dictator Park Chung Hee, who drove South Korea’s early industrialization, the

state set targets – a three-child family in 1968, a two-child family in 1971,

and a one or two-child family in the 1980s and backed them up with economic incentives

and a relentless public relations campaign, according to the CSIS study.

In 1950, South Korean wives on average gave

birth to 6.0 children. That fell to 2.1

as long ago as 1983, stabilized briefly to the mid 1990s, then resumed its

decline, “plummeting all the way to 1.1 in 2006, the lowest level of any

country in the world,” according to the CSIS study.

“At the time, no one anticipated that

fertility would sink to the replacement rate within a generation – much less

fall far beneath it. Few believe that government anti-natal policies, combined

with the impact of rural-urban migration, industrialization, rising educational

attainment and the changing role of women would be so effective.”

Although some demographers say today’s new

generation of women are merely delaying marriage and childbirth and that the

fertility rate will rebound, others don’t believe that’s going to happen. The

tradition that women who marry are expected to quit their jobs has meant that

many women are working past their prime birth years, and those who do marry put

off having babies longer.

According to Hyun Jin-Song, the chief

doctor at Bucheon Seoul Women’s Hospital, quoted in JoongAng Daily, one out of

every seven married couples is unable to conceive because of infertility. South Korea has

now become one of the world’s leaders for infertility treatments and in vitro

fertilization. The government in 2006

stepped in to partly pay for the fertilization process for childless couples.

South Korea is on track to lose a third of its working-age population by the

middle of this century, according to the report. “Korea’s child population already

peaked in 1984 and has since shrunk by 31 percent. The working age population

is expected to peak in 2018 and decline thereafter.”

While that was happening, South Korea embarked on breakneck economic

growth along with Asia’s other tiger economies – Hong Kong,

Singapore and Taiwan.

But none, the CSIS reports, did so well. Although all three other countries all

had a substantial head start, South

Korea’s gross domestic product now exceeds

that of the other tiger economies combined.

The fact of a falling birth rate and a

rising economy are closely intertwined, the report says, “since the aging

associated with demographic transition tends to track, in all societies, the

speed and timing of their modernization.”

The inevitable upshot is a rising old-age

dependency that threatens the material security and social identity of the

elderly. The country faces a major challenge in providing a decent level of

support without imposing a crushing burden on the young, the study says,

arguing for a fundamental restructuring of Korea’s retirement system. Their

recommendations include a three-step reform strategy that would create a

universal floor of old-age poverty protection financed through general

government revenues, transforming the current National Pension System by

combining it with a mandatory system of fully funded “add-on” personal

accounts, and expanding supplementary employer pensions.

South Korea, the report says, is lucky because for the next 10 to 15 years, it

will continue to enjoy the benefits of a youthful population and a growing

workforce. Along with this demographic window of opportunity, Korea also has

an economic and political window. Most

fast-aging developed countries, the report says, are burdened by enormous

unfunded benefit liabilities that raise the economic and political costs of

reform. Korea,

precisely because its welfare state is so new, is more able to change course.