[Viewpoint] The coming generational clash

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[Viewpoint] The coming generational clash

With each passing day, the once-dry study of demographics becomes more dramatic and urgent. According to the National Statistical Office, the size of our population will start decreasing within a decade. One out of seven people in our country will be over 65 years old in the next decade and, in the next decade, 25 percent of the population will be senior citizens. Our society is moving steadily toward a fearful reality: old age. The changes in our demographics over the next 10 years will even affect the real estate market. In fact, the steady aging of our society is already considered a factor in the current downward spiral in housing prices.

Various studies are being done on the repercussions of mass aging on the economy and society. But we have yet to examine its effect on the generation gap. Some of the key factors in our currently divided society are regional and ideological differences. Regional disagreements will likely ease once our increasingly mobile population moves to other regions and countries. The magnitude and depth of ideological differences will also likely calm down as our society diversifies and matures. But a generation gap can widen as a result of the change in demographics because a conflict of interests can occur in the labor market.

Ominous symptoms of this trend have begun to surface. College graduates have to apply to hundreds of companies in search of work, at the same time the middle-aged workforce is desperately attempting to cling to their jobs. The green belt that was reserved for future generations is being used for apartments for the current generation. Our national debt poses the biggest problem. National debt is basically incurred when the current generation uses up financial resources set aside for future generations. The young generation will be hard hit by today’s national debt when they reach middle age. The young are creditors to the current generation. But with the population decreasing, they may end up paying the debt through a heavier tax load. In short, they will pay for our spending spree with no guarantee of getting their money back.

Elections will increasingly turn into contests between different generations over economic interests. Candidates will undoubtedly curry favor with elderly citizens because they have the greatest number of votes. They will woo elderly voters with promises of fatter pensions and subsidies for medical care. Some may offer dental implants and dentures for free. But the problem is that the bill for that medical care will ultimately go to the youth population. The young also will have to cover the widening deficits in state pensions that are currently structured to give to the elderly more than they paid out through their working lives. Little may be left in the coffers when young people reach the age when they start receiving pension beneficiaries.

The generational conflict over economic issues will get worse with the growth of our elderly population. The middle-age bracket might live 20 to 30 years after their retirements, but their sources of income will be limited. They cannot be entirely blamed for being unprepared. That generation has been working like Trojans all their lives to accomplish industrialization and get through major financial crises, with little leeway for saving for the future. Once economic growth slows and work opportunities thin out, the young population too will be stuck in a bottleneck. With limited income resources, their capacity and patience will run out.

It will be too late to fix the stable once the horse has bolted. We must quickly address the matter of our declining population. But more importantly, we must embark on solving the conflicting elements between different generations. We should put our heads together now to seek fundamental and reasonable solutions to present conflicts in the workplace as well as future ones in regards to pension and welfare issues. If today’s young and elderly start a fight to the finish over economic problems, we may leave a catastrophic legacy to our children.

*The writer is a professor of economics at Sungshin Women’s University.
Translation by the JoongAng Daily staff.

by Kang Suk-hoon

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