What the Government Must Do to Escape Low Birth Rates

In 2021, South Korea’s population was recorded at approximately 51.738 million, a decrease of about 91,000 from the previous year. It was the first population decline since the nationwide census began in 1949. In fact, the warning signs of population decline caused by low birth rates had been flashing for a long time. That is because 1983 was the first year in which the total fertility rate fell below the replacement level of 2.1. Roughly 40 years later, as of 2022, South Korea’s total fertility rate stands at 0.78.

Unless the total fertility rate rises substantially, South Korea’s population decline is expected to continue going forward. According to the medium-variant population projection as of 2020, the country’s population is projected to fall below 50 million in 2041 and below 40 million in 2066. Given that population is itself national competitiveness, population decline is a catastrophe that will cast a dark shadow over South Korea as a whole, including its economy. What, exactly, has the government been doing to allow the country to reach a point where talk of the extinction of the Republic of Korea no longer sounds like a joke?

It is not as though the government has simply stood by idly for 40 years. The government began to seriously address the problem of population decline in the early 2000s. In May 2005, the Framework Act on Low Birth Rate in an Aging Society was enacted, and in September of the same year, the Presidential Committee on Ageing Society and Population Policy was launched. The Basic Plan for Ageing Society and Population Policy established and announced by this committee is the core of the government’s response to population decline.

As of 2023, the 4th Basic Plan for Ageing Society and Population Policy (2021–2025) is being implemented. Looking at the 1st through 4th Basic Plans announced so far, one could almost wonder whether there is anything left for the government to do, as they comprehensively cover policies in every field—social, economic, cultural, and more—to overcome low birth rates. Yet despite these government efforts, population decline became a reality in 2021. One cannot help but even begin to doubt whether low birth rates have become a problem against which no remedy works.

What is clear is that over the past 20 years, low-birth-rate measures implemented with an enormous budget approaching 200 trillion won have failed to produce meaningful results. If so, the natural next step is to revise and supplement those measures. The problem, however, is that the long-term comprehensive measures presented in the Basic Plan for Ageing Society and Population Policy are not particularly easy to fault.

Moreover, measures to address low birth rates are inherently long-term policies whose effects can only be realized over time, and because they have been steadily revised and supplemented over the past 20 years, it is not as easy as it sounds to propose new directions for improvement from a fresh perspective. Then what can the government do right now to break out of the low-birth-rate trap?

First, policymakers must carefully examine whether they have been properly using each and every one of the many remedies available. Then, among those many remedies, they must identify the most effective ones and prescribe them intensively. In other words, what the government must do is choose and concentrate. Rather than taking comfort in presenting department-store-style comprehensive plans upgraded every five years, it should evaluate whether the detailed implementation measures are actually being properly operated by central government ministries and local governments and how much performance they are producing.

Through such evaluations, the government should identify the most effective policies—those with strong public response and strong results among the many measures—and implement those policies intensively. Fortunately, the government also appears to be planning to improve policy management in this direction. In an interview with an economic daily in April 2023, Kim Youngmi, Vice Chair of the Presidential Committee on Ageing Society and Population Policy, declared that, following policy evaluations, the government plans to cut the 214 low-birth-rate measures in half.

As important as selection and concentration in enhancing the effectiveness of low-birth-rate measures is breaking down the boundaries between policies. Measures to address low birth rates must fundamentally provide incentives that lead a household to revise its family planning—that is, incentives to have children. For that reason, they require comprehensive approaches related to the lives of all household members, especially the overall lives of parents responsible for raising children.

The reason the Basic Plan for Ageing Society and Population Policy has so far included such a vast array of policies across sectors can also be understood in this context. What policymakers must keep in mind is that even policies not included in the Basic Plan for Ageing Society and Population Policy can still affect a household’s family planning. Accordingly, policymakers should break down policy boundaries and review and supplement all government policies with the understanding that every policy implemented by the government is, in effect, part of low-birth-rate policy.

For example, labor market policy is one of the policies that has a major impact on household family planning because it is closely related to the income and time use of (prospective) parents. The recently controversial proposal allowing a maximum 69-hour workweek is, from the worker’s perspective, a system that inevitably reduces leisure time as working hours increase.

In addition, if the working hours of existing workers increase, this may reduce the creation of new jobs, raising concerns that unemployment among (prospective) workers newly entering the labor market could increase. Because reduced leisure time and higher unemployment are highly likely to negatively affect a household’s family planning, the maximum 69-hour workweek can be said to be a policy somewhat at odds with efforts to address low birth rates.

Therefore, when policymakers consider introducing a new labor market system such as the maximum 69-hour workweek proposal, they should also examine the impact such a system would have on household family planning and make more careful efforts to ensure that introducing the new system does not lead to a decline in the birth rate.

Jinyoung Lee

Professor, Division of Economics, Information and Statistics, Kangwon National University

---

Original title: '저출산 탈출'을 위해 정부가 해야할 일

Author: Jin-young Lee

Date: 2023-04-13

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=25532