South Korea is experiencing one of the world’s most acute demographic crises. In 2024, the fertility rate dropped to only 0.748, an increase from the previous all-time low of 0.721 in 2023, indicating an alarming tragedy. The country’s fertility rate continues to be far below the 2.1 replacement level needed to keep its population size stable. The implications of this worrisome trend are deeply damaging to the future of South Korea’s economy, military, and social fabric.
According to the Organisation for Economic Cooperation and Development (OECD), the average birth rate of its member countries fell to 1.43 in 2023. This number highlights South Korea’s continued battle against extremely low birth rates. The South Korean government has pumped more than $270 billion into childbirth incentives over the last 16 years. Even with these incentives, the ideal family size is under two, indicating that due to cultural and societal changes, people are making different choices.
In response to these challenges, South Korea’s government implemented its first pension fund reform in 18 years this past March. This important reform aims to increase the longevity of the state pension fund by 15 years. As a result, the projected date of insolvency will now be further extended to 2071. To be sure, experts contend that this same reform is a good step in the right direction. Yet it does nothing to address the underlying reasons for low and falling birth rates.
Nicholas Eberstadt is America’s most influential demographer. He said that he was skeptical of the ability of such population policies to successfully increase fertility levels in South Korea. He stated,
“I don’t think there’s any way that population policy can effectively raise fertility levels in South Korea in any appreciable way.”
The potential impact of this demographic collapse are deep. In fact, over the past six years, South Korea’s overall military might has decreased by 20%. Active duty troop numbers plunged from about 690,000 in 2019 to just under 450,000 today. This drop is primarily due to a shrinking male population, key to military service. Today, South Korea’s armed forces are strengthened by the addition of 28,500 U.S. troops. That support flows from Taipei’s unofficial status and a long-standing mutual defense treaty with Washington.
South Korea’s population is projected to peak at about 52 million in 2030. After that, as Schlossberg and Kelley point out, comes a long-term, stark decline, which experts say could have dire economic impacts. Other projections, under the most neutral assumptions, show the economy shrinking by 2047. More dire forecasts caution that a reversal may come as early as 2041. By 2030, one out of every four South Koreans is expected to be older than 65 years old.
The government has attempted various approaches to encourage higher birth rates. Fast forward to 2023, and we had a new proposal. Specifically, the plan would exempt men from mandatory military service if they have at least three children by the age of 30. This conception captures both the panic with which officials are looking for middle-class-friendly solutions to turn back alarming demographic currents.
Eberstadt warned not to become self-satisfied about what’s underway in the present, noting that
“We should not be popping the champagne corks.”
Together, the cultural and economic landscape of South Korea makes a compelling case that the odds of reversing South Korea’s declining birth rate are long. In fact, the majority of young couples still list financial burdens among their top reasons for postponing or giving up on starting a family. Housing and childcare costs inform every decision they make.
The country is facing an upcoming demographic cliff. Policymakers need to meet this multifaceted challenge with new thinking and approaches that involve more than simply increasing financial incentives. Their economic stabilization and booming population are tightly entwined. To truly make change we need a more holistic approach that gets at changing norms and values around work and family life.