Thursday, July 5, 2012
Korea joins the 20-50 club, and its implications on becoming a 30-50 club country
As of June 23, 2012, Korea's population hit the landmark figure of 50 million, according to Statistics Korea. The population increase is significant in that Korea became the seventh country with a population of over 50 million and per capita income exceeding US$20,000, following Japan, the US, France, Italy, Germany and the UK. Vice Minister of Strategy and Finance Shin Je-Yoon said that Korea has now succeeded in achieving both quantitative economic expansion and qualitative improvement.
Besides Korea, all the other countries have increased in the meantime their per capita to over USD 30’000. This is a signal that a large population is a central factor for a sustainable economic growth. There are several factors behind Korea’s impressive growth in the last two decades. The 1997 Asian financial crisis has become in fact a tremendous chance for Korea and its response to it has been the opportunity that has brought the country to its impressive economic achievement today. Korea managed to shift from an investment driven, technology intensive country to an innovation driven country, based on high-technology innovation in the late 90s and knowledge-based county in the late 2000s.
However, there is no time for complacency. Korea's population surpassed 40 million in 1983, and since then, has expanded by 10 million in the past 29 years. Statistics Korea forecast that the number will further increase to peak at 52.16 million in 2030. However, driven by the country's low birthrate, it is expected to fall back below 50 million in 2045 and further decline to 30 million in 2091.
Korea's birth rate is one of the lowest in the world. After falling below the replacement-level 2.1 for the first time in history in 1983, the rate slid to mark 1.23 in 2010. A nation can maintain the current population level only when a woman of childbearing age gives birth to 2.1 children or more during her lifetime. The falling birthrate is attributable to an increasing number of women in their 20s and 30s who participate in economic activities and delay or forgo marriage. It is estimated that the birth rate will reach 1.42 in 2040, slightly up from 1.23 in 2010. However, experts claim that the figure is too low to prevent a population decline.
Furthermore, Korea is struggling with its rapid population aging. In its recent report, the Royal Bank of Scotland announced that Korea has the world's fastest aging population. The median age for Korea jumped from 21.8 in 1980 to 37.9 in 2010. The nation's statistical agency predicted that it will further increase to 48.5 in 2030 and mark 52.6 in 2040. It is expected that Korea will become the most aged country in the world in 2040 along with Japan and Germany whose median age will reach 52.6 and 50, respectively.
Based on the falling birthrate and rapid population aging, the economically active population aged 15-64 is also dwindling at a fast pace. According to the prediction, the number of Koreans aged 15-64, which stood at 35.98 million as of 2010, will fall to 28.87 in 2040, dropping more than 7 million. Accordingly, the ratio of the number of senior citizens aged over 65 to 100 economically active people aged between 15 and 65 is on the rise. In 1980, the ratio stood at 6.1 but more than doubled to 15.2 in 2010. It will continue to move up to 22.1 in 2020 and record a whopping 57.2 in 2040.
Korea's economically active population is estimated to decline after reaching its peak in 2016. Under the circumstances, the government should work strenuously to boost the birth rate. It could also learn from the concept of 'active ageing,' which was developed by the European Commission. In the meantime, the government will thoroughly examine what implications the 50-million population suggests to the country and build up strategies to overcome challenges ahead.
We hope Korea can overcome the imminent challenges it faces right now, and does not put an end to the positive legacy of "all countries that reached the 20-50 club one day becomes a 30-50 club."