South Korea's birth rate remains alarmingly low despite spending $200B in 16 years

South Korea's birth rate dropped to an alarming new low of 0.78 per woman in 2022 as fertility continued its steady decline despite spending about $200 billion over the last 16 years to promote population growth.

The World Economic Forum in its latest report warned that if the current low birth rate continues, the East Asian nation "will be less than half what is now by the end of the century."

South Korea had an all-time low birthrate for the third consecutive year in 2022, with only 249,000 babies born in the country, resulting in a further 4.4% decline in population from the previous record low in 2021, according to state-run Statistics Korea data released in February.

The data showed that the average woman gave birth to her first child at the age of 33 last year, followed by 34.2 and 35.6.

According to a Northeast Asia Economic Forum report, South Korea put family planning programs at the top of its agenda in 1962, after the country's population growth peaked at 3.0% in 1960, and later the low fertility policy was abolished in 1996, and adopted a new "Population Quality Improvement Policy," after the rapid fertility decline.

Despite government efforts, the country's total fertility rate, which counts the average number of children a woman bears in her lifetime, dropped to 0.78 in 2022, making it the lowest level since Statistics Korea began gathering data on the subject in 1970.

"In 1983, the TFR (total fertility rate) decreased to less than 2.1 (population replacement level), which is the fertility rate required to maintain the population. It has continued to fluctuate below 1.3 since 2001 and had further decreased to 1.0 for the first time in 2018," according to a last year study published by the Journal of Korean Medical Science.

CAUSES OF LOW FERTILITY

South Korea is facing a decline in childbirth because many young people are distancing themselves from marriage and having children due to the lack of decent job opportunities, high home prices, and heavy private education fees.

Last month, Statistics Korea in its latest report revealed that half of Koreans consider marriage to be unessential, while nearly 60% of those in their 10s and 20s believe that childbirth is not a must after marriage, according to the local Yonhap News Agency.

The report also showed that each household had an average asset of 547.72 million won (approximately $410,000) and a debt of 91.7 million won (approximately $68,000) last year, the news agency said, citing the Statistics Korea report.

To encourage parents for more children, experts suggested reforms to the current education system, which is very expensive and out of reach of many parents.

"There are several factors underlying South Korea's low birth rate. First, South Koreans are typically getting married at older ages due to longer schooling," wrote Andrew Eungi Kim, a professor of International Studies at Korea University, in a recent article published by East Asia Forum.

Other factors behind the declining birth rate, Kim pointed out include a growing number of people staying unmarried due to a lack of financial resources, job security, and parents spending more than $400 per student every month.

"The persistence of an abnormally low fertility rate will have serious consequences for South Korea's economy," Kim wrote.

In addition, he warned that the number of people who are economically active (aged 15 to 64) could fall from 37.4 million in 2015 to 20.6 million in 2065, a significant decline of more than 55% in 50 years.

GOVERNMENT INCENTIVES

To overcome the declining birth rate, the government announced last month an increase in monthly allowance for parents with children under the age of a year.

"Starting now, that sum will more than double, from 300,000 won (about $230) to 700,000 (about $529). Another hike in 2024 will bring it up to 1 million won, or roughly $770 per month. The average monthly salary in South Korea was about $3,400 as of December 2022," according to a World Economic Forum report.

"This move will further increase the huge investment the country has already made in trying to raise its birth rate. Over the past 16 years, South Korea has spent as much as $200 billion without much to show for it, as fertility has continued its steady decline," the report said.

President Yoon Suk Yeol has also promised to improve childcare services, provide housing for newlyweds, and cut health care expenses for young kids.