Making more babies
China has formerly ended its one-child policy, which was in force for 35 years. Two years ago, Beijing eased the regulations for couples in certain circumstances. Now, all Chinese are free to have two children, a shift driven by demographic concerns about rapid aging and a shrinking working population. The United Nations estimates the working population aged between 15 and 64 in China will decline after peaking last year. China’s average per capita income is still relatively low at $7,500. The country could easily fall into the middle income trap if growth loses momentum due to an aging population. An atrophied working population lowers growth and individual savings while increasing government welfare and healthcare costs.
China was right to try to boost its birthrate, but the effect could be limited as Chinese have become accustomed to having a single child. Even if births increase, at least 15 years will be needed to help the working population numbers.
Korea has one of the lowest birthrates in the world. Total fertility rate, or the average number of children that will be born to a woman over her lifetime, is 1.2. People aged 65 and over will make up 14 percent of the total population by 2026, up sharply from the current 7 percent. The economy will lose vitality and size due to the reduced number of people working and spending.
The government has spent over 60 trillion won ($53 billion) to promote giving birth during the last decade. But the numbers only got worse. The number of marriages, which totaled 435,000 in 1996, plunged to 305,000 last year. Young Japanese people think tying the knot and settling down is pointless because marriage will burden them with three lifetime liabilities: a spouse, a child and a mortgage. The ratio of people who never got married among Japanese aged 45 to 54 is 20 percent of the male population and 11 percent of females. More and more Koreans also prefer to live the single life.
The fertility rate has been sliding ever since incomes grew in the early stage of industrialization. People used to have many children because they were affordable and were a form of social security for old age. In modern times, they prefer to have fewer due to rising costs. The decline accelerated after more women found jobs. Korea’s fertility rate was high after the war. Due to the baby boom from 1955 to 1963, the working population exceeded 20 million between 1970 and 2014. The baby boomer generation had fewer kids and saved more. Birthrates came down, and children were educated better. The ratio of women who go to college, which was 10 percent in 1982, is now 85 percent.
Low birthrates are an inevitable socioeconomic reaction when women get higher education and participate more in economic activities. The challenge is to raise birthrates while keeping a high level of female employment. If a policy is too oriented towards promoting birth, women’s economic participation and growth could be hurt.
Korean women are not so economically active compared with advanced countries. The ratio of economic participation by women is 58 percent, compared with 79 percent among men. The employment ratio of women, which hovers at 73 percent for women in their late 20s, falls to 57 percent when women reach their late 30s. Married women must be able to continue to work through better corporate and public support in day care and after-school programs. Working conditions should be flexible so that women’s talents do not go wasted because they give birth. Men’s family leave should be promoted so that fathers can share the responsibility of taking care of kids. Financial support like medical coverage for births and loans for newlyweds recently introduced in new measures to promote giving birth also can help. Ultimately, increases in decent-paying jobs would be the best incentive for people to get married and have children. The services sector must provide good jobs for married women.
If local tools remain limited and inadequate, the government must consider promoting cross-cultural marriages and immigration. Korea, Japan and China all face the same demographic challenges, but Korea’s birthrate is the worst. We must be more aggressive in addressing the problem in order to survive.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, Nov. 6, Page 35
The author is an economics professor at Korea University and former senior economist at Asian Development Bank.
by Lee Jong-wha