Finansnyheder

South Korea’s birth rate falls to new developed world low

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South Korea may be known for its high levels of productivity when it comes to manufacturing televisions, smartphones and cars but there is one crucial area in which the country is struggling to keep up with its competitors: babies.

South Korea’s birth rate, already the lowest in the developed world, has fallen to a new low on factors such as the high cost of private education despite various government initiatives to prop it up, raising concerns about the country’s bleak demographic outlook.

The country’s fertility rate — the number of expected babies per woman — fell to 0.98 in 2018, according to the latest government data released on Wednesday. It was already the lowest at 1.05 in 2017 among members of the OECD, far lower than France, which was the highest in the organisation with 1.86 expected babies in 2017, the US at 1.77 and Japan’s 1.43.

The replacement level — the total fertility rate for developed countries needed to keep the population constant — is 2.1 per cent.

Given its falling birth rate, Asia’s fourth-largest economy is expected to grow older more quickly over the next four decades than any other country, including Japan and China, despite the latter’s former one-child policy.

“This is really bad news for our long-term growth outlook. The lower birth rate shows how pessimistic people are about our future economy,” said Park Chong-hoon, an economist at Standard Chartered. “There is no short-term fix for this problem, which is linked to [the high cost of] education, welfare and property issues.”

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Concerned about the impact of a falling birth rate on productivity and fiscal stability, the government has spent billions of dollars to fund free nurseries and the provision of public day care services. South Korean parents have the right to one year of subsidised childcare leave and access to government-trained babysitters. The Seoul city government last year introduced cash incentives of Won100,000 ($82) per child birth.

Yet the number of South Korean babies being born has continued to fall, dropping 8.7 per cent last year compared with 2017, following declines of 11.9 per cent and 7.3 per cent in the two previous years.

Many South Koreans are reluctant to have more than one child because of the steep cost of private tuition, considered essential in the education-obsessed country. This consumes a 10th of household income, according to government data. About three quarters of high school students receive private tuition and a similar proportion of those go on to university.

“One child seems enough for me, given the expected cost. The government incentives and subsidies do not help much,” said Lee Jung-woo, a newly wed 36-year-old resident of Seoul, who is expecting a baby in November. 

Baek Da-som, a mother who had to quit her job recently at a big construction company to take care of her one-year-old daughter, said she did not plan to have another child. “It is all about welfare. It is difficult to raise a child without enough state support,” she said.

Policymakers are also concerned about the country’s falling potential growth rate due to ageing, with South Korea now having more economically active people aged over 60 than in their twenties.

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Despite growing concerns about the looming labour shortages, South Korea maintains a strict immigration policy, not allowing foreign workers to migrate with their families or apply for South Korean citizenship in most cases. 

Experts predict the country’s demographic problem will worsen in the coming years. “The birth rate keeps falling for various reasons such as later marriages, high education and housing costs, high youth unemployment, just to name a few,” said Lee Sang-jae, an economist at Eugene Investment & Securities. “There are limits to what the government can do to reverse the trend.”

Via Financial Times

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