South Korea stands at a critical juncture, grappling with a declining birthrate that holds profound implications for its economy and society. The government and society are compelled to explore policy measures that can counteract the far-reaching consequences of this demographic decline.

The fertility rate has sharply dropped from an average of six children per woman in the 1960s to a mere 0.7 children in Q2 2023—the lowest globally. This alarming figure falls well below the population replacement rate of 2.1 children per woman. In 2022, the country’s total population experienced a decline for the second consecutive year, a situation not witnessed since 1949. Demographers predict that, at this rate, the population could plummet to 38 million by 2070, down from the current 51.7 million.

Termed the “population cliff,” the top-heavy population structure poses challenges to the workforce. A shrinking working-age population may hinder economic growth, impacting productivity and innovation. As birthrates decrease and the population ages, the working-age population is projected to drop from 72 percent in 2020 to 56 percent by 2040. Younger cohorts will shoulder increased responsibilities for both childcare and elderly care, straining public resources, especially healthcare and pension systems. The reduced demand from a smaller population of young consumers further compounds economic challenges.

Various factors contribute to South Korea’s demographic decline, including changing societal norms, high living costs, and demanding careers that leave little room for family life. Government interventions include childcare support, education subsidies, and expanded parental leave policies to create a family-friendly work environment.

However, challenges persist, such as financial constraints and cultural norms discouraging larger families. To enhance policy effectiveness, South Korea should adopt a two-pronged approach linking economic incentives with cultural change. Younger generations engage in debates on gender roles, and a broader cultural shift is essential to support these policies fully.

Immigration policies serve as short and mid-term solutions, including a guestworker program and long-term immigration through marriage migrants. Yet, integrating children with immigrant parents into mainstream Korean society requires significant societal changes.

South Korea’s journey to navigate the population cliff is formidable, but with resilience and adaptability, the nation can reshape its cultural ecosystem, create an equitable labor market, and ensure social safety nets for all citizens. Through comprehensive policy measures, South Korea can secure a bright and prosperous future for generations to come.

By Impact Lab