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The economics of South Korea's declining birth rate

The economics of South Korea's declining birth rate

FRIDAY, May 22, 2015

Grooming one's child in achievement-oriented society overwhelms the great majority

The declining birthrate, which is contributing to depopulation in Japan, is affecting neighbouring South Korea even harder. The fertility rate in South Korea fell as low as 1.21 in 2014, even lower than Japan. South Korea’s population is predicted to start declining after peaking at 52.16 million in 2030. We visited Seoul in late April to gather information on the current situation.
Lee Soo Jung, 37, works for a nonprofit organisation that deals with recycling and other environmental services. Her husband also works, and she has two sons in school, aged 3 and 6. Having heard that private education, through such services as cram schools and tutors, is popular in South Korea, we asked her what the situation was really like.
“When children are very young, we do not let them receive private education unless they want to,” she said.
Her oldest son started studying English and Korean at age 5, and currently does taekwondo and play soccer, while also studying English online and cultivating critical thinking skills through home schooling. His monthly education expenses are 200,000 to 250,000 won (about Bt6,100 to Bt7,500).
“That is less than a lot of kids around here,” she says. “Many of them learn English from a native speaker, and take piano and art lessons.”
Her colleague Lee Min Woo, 33, is married and has a one-year-old daughter. I just cannot afford to invest in private education,” he said. “I would like to create a cooperative group with parents who have similar concerns so we can gather together to teach our children.”
Why is his passion for education so great? 
“South Korea is a society oriented toward academic achievements,” he said. “To be hired by a good company and make it in our society, you have to graduate from a good university.”
This is no exaggeration.
The South Korean economy is virtually monopolised by conglomerates like Samsung, Hyundai, SK and LG. Only about 10 per cent of South Koreans work for these large corporations, and the wage difference between them and smaller companies is substantial. Wanting to give children any slight edge that can help them squeeze through that “narrow gate” is a labour of love for a parent.
Language ability is indispensable in an economy that depends heavily on exports, and South Korea has about 240,000 students studying abroad, about four times the number from Japan. There are about 6,000 South Korean elementary-school students studying overseas. A study by the Korea Institute for Health and Social Affairs, a government research institution, found that a major factor in the declining birth rate is that many married women do not want children for economic reasons, especially because of the cost of child-care and education.
Last year, a Korean television drama – “Misaeng” – made huge waves. The drama directly confronts the issue of social inequality, with a young high school graduate who wants to become a professional go player taking a temporary job at a general trading company.
Kang Myung Suk, editor of the web magazine IZE, said: “It was a complete about-face from all other Korean dramas — where all the main characters are rich or second-generation plutocrats. It put the reality of how difficult it is for young people to find jobs out front for all to see.”
The average monthly salary of a temporary employee is 1.45 million won, less than 60 per cent that of a regular employee. One in three workers in their 20s are temporary workers. “A lot of students enter the workforce buried under college loans,” Kang said.
Even after students graduate, it is difficult to get a job at that “good company” they desire. It has become all too common for many of them to rent tiny rooms called ko-si-won, which were originally for students preparing for exams to both study and sleep.
“No matter how hard they try, their dreams do not come true,” Kang said. “They are disqualified from society, viewed as incompetent. They go through life without money or ambition, and cannot think about things like marriage, kids, or even falling in love.”
In 2005, South Korea’s total fertility rate — the number of children born to each woman in her lifetime — fell to 1.08. Only Hong Kong, whose rate was 0.96, had a lower level among major countries and regions in Asia. Since 2006, South Korea has implemented its “Basic Plan on Low Fertility and Ageing Society.” Institutions providing child-care were increased and made free of charge, and the previous system of fixed paid maternity leave was reinstated. Despite the wide range of measures taken, the decline in the birth rate was not halted. This echoed past government policy failures.
The administration of Park Chung Hee, established after a military coup in 1961, ushered in a period of rapid growth called “The Miracle on the Han River”. At the same time, it instituted birth-control policies based on the belief that pop?ulation growth hinders economic development. The country’s birth rate began dropping precipitously from a rate of 4.53 in 1970.
The government shifted its policy in 1996 to turn this around. The Asian financial crisis of 1997 further delayed the response to the declining birth rate. Tchoe Byong Ho, director of the Korea Institute for Health and Social Affairs said: “During the military dictatorship of Park Chung Hee, people thought ‘If I have a lot of children, I will never escape poverty.’ There was a lot of anxiety about the population growing too fast, and the policy shift came too late. It is difficult to change people’s way of thinking.”
The current administration of Park Geun-hye is trying to do something to avoid falling into the trap of past policy failures.
After Japan’s birth rate fell to 1.57 in 1989, countering the declining birth rate became a major policy issue. Due to a superstition that girls born in the Year of the Fire Horse (Hinoeuma) would make disastrous wives, the birth rate fell to 1.58 in 1966. The 1989 figure was even lower than that year.
Emphasis was placed on improving day-care system, but this could not stop the decline, and the birth rate had plummeted to 1.26 by 2005.
The causes of the declining birth rate are complex, but one of the major factors Japan and South Korea share is that the age when people first marry and the age at which women are having their first child are rising, resulting in fewer women having a second child.
Mika Ikemoto, senior fellow at the Japan Research Institute, said: “University and other education expenses are high in Japan. For some families, having two children is just not affordable.” Japan has a high rate of people who remain unmarried up to age 50.
Another feature particular to Japan is a big influx of people into Tokyo and other major cities, where birth rates are especially low, which accelerates the birth rate decline.
In response to this, the Abe administration established last autumn the “Towns, People, and Jobs Creation Headquarters,” involving municipalities all over the country in comprehensive efforts, to stem depopulation and revitalise local economies. These efforts include a wide range of policies such as continuation of child-care support, reduction of long work hours and a jobs creation programme.