[Viewpoint]Face population dip with optimism

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[Viewpoint]Face population dip with optimism

Thirty years ago one of the greatest perceived threats to human existence was runaway population growth. From bestselling books such as “The Limits to Growth” to Hollywood fantasies such as “Soylent Green,” the scenario was of teeming billions overwhelming the Earth’s resources, leading to crises and doom.
Such fears seem quaint now, with many countries facing the opposite peril ― a population decline. The threat is felt nowhere more keenly than in Korea, where the fertility rate last year fell to 1.08, one of the lowest in the world. To put this in perspective, for a population to maintain its size each woman must give birth to an average of 2.1 children during her lifetime. If the rate slips lower, the population will decline. Below 1.5 and this decline is said to be irreversible. Below 1.3 and it will become what has been termed a population “death spiral.”
To be clear: Korea’s population is not yet falling. Fertility rates are a future estimate, based on current trends of how many children the average woman will have. What this means, according to figures released by the Korea National Statistical Office in November of last year, is that the nation’s population, currently just over 48 million, will top out at 49.3 million in 2018 and then begin to fall, reaching 42 million by 2050.
That’s a 12 percent decline from the current numbers ― not as drastic as the 22 percent drop foreseen for Japan, where the decline has already begun, but is alarming nonetheless. The proportion of seniors 65 and over, meanwhile, is projected to increase from the current 9 percent to 20 percent by 2026.
But is this all bad news? Not necessarily. To begin with, women in developed countries today can make choices they never could in the past. They can choose to remain single, to pursue careers, to not have kids. Declining fertility rates, in other words, are the result of women exercising their freedom to choose. Surely that cannot be such a bad thing.
And consider this: Developed societies are aging not just because women are having fewer babies, but also because people are living longer, currently about 77 years in Korea, up from 47 years in 1955. Again, not a bad thing.
Indeed, population decline in developed countries is arguably nothing more than a symptom of society’s adjustment to increasing prosperity and freedom. It is a process that will likely lead to a natural reversal in the declining trend as a higher value is placed on having children and incentives increase. This is already taking place, with the government launching a program in June of last year offering tax breaks to households with two or more children, subsidized day care and preschool education.
The challenge, then, is not to halt a slide into extinction, but rather to get through the 40-odd years it will take for the population decline to be halted and equilibrium reached. It may be tough going, but even here some good may result.
Faced with a shrinking workforce, companies will be forced to streamline, innovate, rely more on robotics and offer better job training and working conditions as competition increases for a limited workforce. It is inevitable this will happen, given the Darwinian nature of business in a free society. Those companies that meet the challenges of demographic changes successfully will survive and prosper. Those that do not will go bankrupt and die.
The result? Workers will enjoy higher salaries and greater employment opportunities ―more freedom to find the best jobs and live their lives to the fullest. The economy, meanwhile, will benefit from improved labor productivity, an area where Korea still lags far behind other developed nations. According to OECD data for 2005, GDP per hour worked stood at $34.40 in Japan, $48.30 for the United States and $36.40 on average for all 30 member countries. Korea ranked 27th at $19.70.
Such an increase in labor productivity will do much to meet the most immediate challenge posed by demographic change: how a shrinking workforce will support a growing number of retirees. A rise in labor productivity to the world standards would mean a 75 percent increase.
Let’s say it currently takes the taxes of three workers to support one retiree. The increased wages and thus higher taxes that would result from a 75 percent increase in productivity could reduce this ratio to, say, 2:1. That would go a long way toward getting through the “senior bulge.”
The population decline seems an unavoidable part of the process of adapting to increasing prosperity and freedom. The adjustment will be challenging and possibly difficult and painful for Korea. There may be an advantage, however, in being among the first group of countries to enter this unknown territory and tackle the challenges there. The result may be an upsurge in productivity and better employment opportunities and higher salaries for workers ― in short, a stronger economy and a richer and happier people.

*The writer is a practical English professor at Yonsei University and author of “The Imjin War.”

by Samuel Hawley
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