South Korea’s demographic challenges and Intra-Asia-PacificCooperation
By Choong Yong Ahn
Distinguished Professor
Chung-Ang University
Prepared for the 2023 on-line Asia-Pacific Forum organized by theJapan Economic Foundation, December 12-13, 2023
South Korea faces serious demographic challenges, heading to one of thefastest ageing population and the lowest birth rate with 0.78 per awoman in the world–much lower than Japan’s fertility rate at 1.26 - tobecome a super-aged society by 2025. By then, the proportion of people
aged 65 years and over will reach 20% of the total population of South
Korea. In 2020, for the first time since the country’s founding in 1948,
South Korea registered a net population decline.
Economically, the low fertility rate has already serious consequences forSouth Korea’s economy. The most obvious problem is a decline in theeconomically active population (15–64 year olds) from 37.4 million in2015 to 20.6 million in 2065 — a drop of more than 55 per cent if thecurrent trend continues persistently in next some 30 years. As a result,South Korea is likely to suffer diminishing consumption, waning ofinvestment, a budget imbalance in which welfare expenditure on theelderly will soar while tax revenue will decline and a pension shortfall isinevitable.
Given these demographic challenges, South Korea should consider toopen domestic labor market systematically to foreign workers who canbecome permanent residents and also to introduce a formal immigration
policy to resolve on-going demographic crisis.
In 2004, South Korea began accepting low-skilled foreign workers, whocan fill in labor demands in rural farming, construction, and care-giving
for elder people, etc. South Korea had about 49,000 long-staying foreign
nationals in 1990, increased to 2.52 million by the end of 2019, making1

up 4.9% of a population of about 51 million. About 40% of these
foreigners are Chinese, mostly people of Korean descent. Korean Chinese
are in great demand because they speak the same language and share asimilar diet. Long staying foreign nationals are also allowed to exercise
voting rights to elect public officials. As such, foreign migrants can now
influence South Korea’s domestic socio-political scenery.
South Korea has maintained a long homogenous ethnic identity, which
can no longer sustainable. Japan has also started to adopt similar foreign
worker policies. So we can learn each other on the policy implementationof foreign workers’ migration. South Korea also needs to collaborate withlabor surplus Asia-Pacific economies to ensure mutually beneficial
international movement of labor forces including Korean language
schools and some on the job training.
In addressing the super-aged society, South Korea will face rising social
welfare costs to deal with underemployment, youth unemployment, andincreasing healthcare costs. Another critical matter is to revamp national
pension system to ensure long term sustainability for future generations
under a principle of more contributions and less payment. Prevailingpolitical populism tends to make it harder. Domestic consensus isneeded to develop economic growth cum needed social welfareexpansion.
South Korea’s wrenching demographic challenges are also likely toimpact greatly South Korea’s socio-political future. There are four
distinctive age cohort groups in Korea, which have very different viewson South Korea’s politic0 socio economic system. First, there is Korea
War generation and the postwar baby boomers in their late sixties andolder. Second, the Democratization Generation (known in South Korea
as the 386 Generation) now in their fifties and early sixties, who wereborn in the 1960s and involved their diehard activism against highgrowth oriented and militant governments during the country’s
democratization in the 1980s. Third, the first post-democratization
generation in their forties known as Generation X. Finally, there is themillennium generation in their twenties and thirties, known as MZ
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grown up in an affluent South Korean society but face growing economic
angst.
While South Koreans of all ages support democracy in principle, the four
generation groups respond differently to emerging international conflicts
and inter-Korean relationship. North Korea has been perceived very
differently by each generation: from totally anti- North Korean regime by
the war time generation, to a more accommodative stance to North
Korea’s “self-reliance” doctrine by the 386 generation, and then rather
indifferent attitude towards North Korea by younger generations. Given
ideological differences, it is critical challenge how South Korea to ensure
a consensus based robust democracy in case of serious potential interKorean conflicts.
In addressing worsening income inequality and related social welfare
programs, perception gaps across different cohort groups are anotherserious issue. Politicians tend to take an advantage of the generation
gaps to win popular support by adopting highly populistic policies at theexpense of unborn future generations. It is a big challenge for South
Korea how to implement effective mechanism for inter-generation
dialogues to reach a national consensus towards a truly open democratic
welfare state.
On the low fertility issue, South Korean mothers’ average age at theirfirst birth was 33.5 in 2022, compared to an OECD average of 28.3 in2019. All adults in South Korea are fully aware of the country’s‘educational hell’. They themselves were subjected to going to a myriadof extra-curricular schools after school and being under pressure for
their children to excel at school for their successful careers. As a result,education costs in the country are extremely high. Given thesecompetitive high educations cost, younger generation also wants to havemore time for themselves and to focus on their career and to keep theirfreedom and independence, placing a married life on a second priority.
To a certain degree, most of Asia-Pacific economies face demographic
challenges one way or another. Most of South Korea's policy responses tocomplex demographic challenges offer some valuable lessons to otherAsia-Pacific economies. Simultaneously, South Korea should learn3

lessons from other Asia-Pacific economies’ policy prescriptions torespective demographic issues. Especially, Asia-Pacific economies should
coordinate each other on needed cross-country migrations of theircitizens.

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