SEOUL – South Korea’s fertility rate, the world’s lowest for years, has fallen again, aggravating the challenges of ageing demographics for the economy.
The number of babies expected per woman fell to 0.78 in 2022, according to data released by the statistics office on Wednesday. At 0.81 in 2021, it was already the lowest among more than 260 nations tracked by the World Bank.
The lack of babies carries long-term risks for the economy by reducing the size of the workforce that underpins its growth and vitality. Welfare spending for an ageing population also drains national coffers that could otherwise be utilised to promote businesses, research and other enterprises that are key to prosperity.
A shrinking workforce is a major cause of South Korea’s declining potential growth rate. The working-age population peaked at 37.3 million in 2020 and is set to fall by almost half by 2070, according to Statistics Korea.
The number of newborns declined in 2022 to 249,000 from 260,600 a year earlier, the statistics office said. That is less than 5 per cent of the population. In contrast, about 373,000 people died in 2022, extending what one policymaker called a “death cross”.
South Korea has the world’s fastest-shrinking population among economies with per capita gross domestic product of at least US$30,000 (S$40,200), according to United Nations projections and World Bank data. By 2100, the number of people is projected to fall by 53 per cent to 24 million. That is a further deterioration from a 43 per cent decline forecast in 2019.
South Korea’s leaders have increased spending to encourage people to have more babies. The moves include President Yoon Suk Yeol’s policy of tripling payments for mothers of newborns.
The government has also adopted a policy of living with an ageing population, after seeing its efforts to urge people to have more babies bear little fruit. The policy includes enhancing living conditions for retirees, accelerating robot adoption and inviting more foreigners into the workforce.
Economists suggest the country needs to do more to improve gender equality so that women feel less worried about losing their jobs when they have children. High education and housing costs are among other factors putting pressure on fertility, data shows.
The average age at which a woman has her first child rose to 33 in 2022, while the number of second children fell by 16.8 per cent. By region, capital Seoul had the lowest fertility rate at 0.59, while Sejong city, home to the government’s headquarters, had the highest at 1.12, according to the stats office.
The figures are preliminary and may be revised later in 2023. BLOOMBERG
