Don’t Worry About Low Fertility Rates, But Be Prepared
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Yunsoo Lee
August 29, 2020
In 2018, the Korean total fertility rate recorded 0.98. Korea has been experiencing the lowest fertility rate among the OECD countries (The average total fertility rate of the OECD member countries is 1.68). The Korean population will decrease if the current tendency continues. This declining birth rate issue has been a grave concern for the Korean government for over a decade. As a result, the Korean government initiated various policies for boosting its fertility rate. However, those policies have not been effective. Accordingly, the Korean government attempts to employ more aggressive policies to foster fertility rates. However, I believe that the Korean government worries too much about low fertility rates.
In the midst of the COVID-19 crisis, 380 Vietnamese workers planned to come to Korea because Yeongyang County invited them. The reason for the invitation was that Yeongyang County needed a hand to harvest peppers. Although the Vietnamese workers could not come to Korea because of health safety issues, this piqued some people’s curiosity: Are there any Koreans who pick peppers? Korea has 51 million people and the Korean youth unemployment rates are 10.5%, meaning that the number of people is enough. The problem is the mismatch between demand and supply of labor.
McDonald’s, snack bars and cafes in Korea started implementing self-service ordering kiosks. This adoption enabled companies to hire fewer people. Over 200 years ago, Thomas Malthus predicted that numerous people will face mass starvation because of an explosive population growth that outpaces agricultural production. One pitfall of his prediction resided in the development of technology such as pesticides, refrigerators and genetically modified organics. The (near) future technology will replace humans to a significant extent, indicating less demand for labor. Hence, a low fertility rate will not be a serious concern for the reduced labor force.
Actually, low fertility rates often synchronize with the transformation of industry. Korean society was largely based on the agriculture sector by the 1960s. At that time, agriculture was a labor-intensive industry that required a substantial amount of manual labor to produce crops. According to the World Bank data, the Korean fertility rate in 1960 was 6.095. This figure was no surprise because of the prime industry in Korea. However, the industrial landscape had dramatically changed after Korean society dived into industrialization. As a result, manual labor was less in demand. In 1970s, therefore, the Korean government even advertised its message, emphasizing the importance of a low birth rate. As Alvin Toffler wrote four decades ago, the third wave gradually diminished the need for manual labor. Additionally nowadays, the artificial technology is increasingly threatening white collar jobs as well. Reversing this trend will be an improbable future.
Regardless of the reasons for the current low birth rate, low fertility rates will loom large in the near future. A big worry is that the Korean pension system is likely to be in danger. The number of those retired will increase and at the same time, the number of those who are of working age will decline, evaporating pension funds. Due to the advancement of technology, furthermore, life expectancy will be increased, deteriorating pension revenues. However, it is weird for the government to ask people to give birth in order to sustain a pension system. There must be another way to maintain the pension system. For instance, governments and companies can promote longer working lives for senior citizens.
In addition, the Korean economy is expected to show signs of sputtering in the near future because of the dropping number of consumers. Low fertility rates tend to intensify this trend. Rapid transformation in the demographic contours of the population will threaten the size of the Korean domestic market. A shrinking market size renders people not to give birth because they cannot easily find jobs. In this sense, low fertility rates could start the vicious cycle of a small market, loss of jobs and the low birth rates. Again, it will be unwise for governments to encourage birth rates simply for stimulating a market size. Maybe, a universal basic income can be a strategic choice.
To be sure, the current Korean government has been undergoing unprecedented pressures brought on by low fertility rates. What I want to argue here is not for the government to exacerbate low fertility rates by doing nothing. What I want to say is that the government should not be obsessed with a low fertility rate itself. Rather, what the government has to do is make Korean society a better place for citizens to live. This is the simple answer to the low fertility rate problem in Korea.
Author: Yunsoo Lee is an assistant professor at School of Political Science and Public Administration, Shandong University. He holds a PhD in public administration and a master degree in public policy. His main research interests are public management, citizen trust in government, and airport.
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Don’t Worry About Low Fertility Rates, But Be Prepared
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Yunsoo Lee
August 29, 2020
In 2018, the Korean total fertility rate recorded 0.98. Korea has been experiencing the lowest fertility rate among the OECD countries (The average total fertility rate of the OECD member countries is 1.68). The Korean population will decrease if the current tendency continues. This declining birth rate issue has been a grave concern for the Korean government for over a decade. As a result, the Korean government initiated various policies for boosting its fertility rate. However, those policies have not been effective. Accordingly, the Korean government attempts to employ more aggressive policies to foster fertility rates. However, I believe that the Korean government worries too much about low fertility rates.
In the midst of the COVID-19 crisis, 380 Vietnamese workers planned to come to Korea because Yeongyang County invited them. The reason for the invitation was that Yeongyang County needed a hand to harvest peppers. Although the Vietnamese workers could not come to Korea because of health safety issues, this piqued some people’s curiosity: Are there any Koreans who pick peppers? Korea has 51 million people and the Korean youth unemployment rates are 10.5%, meaning that the number of people is enough. The problem is the mismatch between demand and supply of labor.
McDonald’s, snack bars and cafes in Korea started implementing self-service ordering kiosks. This adoption enabled companies to hire fewer people. Over 200 years ago, Thomas Malthus predicted that numerous people will face mass starvation because of an explosive population growth that outpaces agricultural production. One pitfall of his prediction resided in the development of technology such as pesticides, refrigerators and genetically modified organics. The (near) future technology will replace humans to a significant extent, indicating less demand for labor. Hence, a low fertility rate will not be a serious concern for the reduced labor force.
Actually, low fertility rates often synchronize with the transformation of industry. Korean society was largely based on the agriculture sector by the 1960s. At that time, agriculture was a labor-intensive industry that required a substantial amount of manual labor to produce crops. According to the World Bank data, the Korean fertility rate in 1960 was 6.095. This figure was no surprise because of the prime industry in Korea. However, the industrial landscape had dramatically changed after Korean society dived into industrialization. As a result, manual labor was less in demand. In 1970s, therefore, the Korean government even advertised its message, emphasizing the importance of a low birth rate. As Alvin Toffler wrote four decades ago, the third wave gradually diminished the need for manual labor. Additionally nowadays, the artificial technology is increasingly threatening white collar jobs as well. Reversing this trend will be an improbable future.
Regardless of the reasons for the current low birth rate, low fertility rates will loom large in the near future. A big worry is that the Korean pension system is likely to be in danger. The number of those retired will increase and at the same time, the number of those who are of working age will decline, evaporating pension funds. Due to the advancement of technology, furthermore, life expectancy will be increased, deteriorating pension revenues. However, it is weird for the government to ask people to give birth in order to sustain a pension system. There must be another way to maintain the pension system. For instance, governments and companies can promote longer working lives for senior citizens.
In addition, the Korean economy is expected to show signs of sputtering in the near future because of the dropping number of consumers. Low fertility rates tend to intensify this trend. Rapid transformation in the demographic contours of the population will threaten the size of the Korean domestic market. A shrinking market size renders people not to give birth because they cannot easily find jobs. In this sense, low fertility rates could start the vicious cycle of a small market, loss of jobs and the low birth rates. Again, it will be unwise for governments to encourage birth rates simply for stimulating a market size. Maybe, a universal basic income can be a strategic choice.
To be sure, the current Korean government has been undergoing unprecedented pressures brought on by low fertility rates. What I want to argue here is not for the government to exacerbate low fertility rates by doing nothing. What I want to say is that the government should not be obsessed with a low fertility rate itself. Rather, what the government has to do is make Korean society a better place for citizens to live. This is the simple answer to the low fertility rate problem in Korea.
Author: Yunsoo Lee is an assistant professor at School of Political Science and Public Administration, Shandong University. He holds a PhD in public administration and a master degree in public policy. His main research interests are public management, citizen trust in government, and airport.
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