According to recent studies conducted by the Ministry of the Interior, South Korea will officially become an aged society this year, much earlier than demographers expected. By 2060, the United Nations (UN) predicts that it will overtake Japan and become the nation with the grayest demographics. Such a low birthrate will have heavy implications on the economy of South Korea in the present and in the coming years.
As of January, elderly people, or senior citizens above the age of 65, were found to make up 13.6% of the population, only 0.4% away from becoming an aged nation. Some demographers look to the low birthrate to explain the sudden increase of citizens above the age of 65, but the vast majority look to our past. When the Korean War ended in 1955, married couples across the nation began to have children, an option many had even during the war, but never chose, lest the war would continue for several more years and supporting a child would make them more impoverished than these couples already were. Just as how there was a sudden population increase in the United States directly following World War II, “baby boomers” were born from 1955 to 1963, contributing to a very youthful population for some time.
However, this was only temporary. While there may have been countless economic benefits that South Korea reaped for a duration of time, primarily a younger and stronger workforce, it must do its best now to combat the possible economic downfalls of becoming an aged nation this year and possibly, as predicted by Statistics Korea, a super aged society by 2026. Due to the fact that at the age of 65, most South Koreans retire and rely on their children and pension funds to maintain sustenance, there will inevitably be a smaller workforce to contribute to the economy. With the low rates of birth, it will be nearly impossible for the next generation to fill the gap opened up by the retired citizens. Furthermore, the government may face difficulties in supporting its senior citizens and guaranteeing a social safety net for all with the infrastructure it currently has.
One step that could be taken is for governments to make it an obligation for private corporations to provide a private pensions, which would reduce the burden the government has to allocate its funds to every senior citizen across the nation. As an incentive, tax breaks could possibly be given to such companies in return from their altruism. Moreover, temporarily, the government could give only tested pensions, meaning pension funds would be given only to individuals of low-income status and without any private pensions. This would reduce economic disparity and provide for those truly in need with the funds the government currently has.