Giving birth to better ideasWhile passing the youthful street of Daehangno one day last week, I noticed it brimming with candy vendors. I soon found that it was White Day, marked mostly in Korea and Japan by boys and men reciprocating the gift of Valentine’s Day chocolates to their female friends.
So I stepped up to a vendor for a candy gift to do my duty to my wife. I congratulated the candy seller for the good business. “It’s all thanks to the high demand,” he remarked.
When there is high demand to buy, the sellers increase according to the law of supply and demand. Even without knowledge in economics, everyone practically knows it by practice.
Korea ranked last among the developed members of the Organization for Economic Cooperation and Development in fertility rates, with 1.3 births per woman last year. It has remained at the bottom in birthrate for the last 15 years. Even as the government offers to pay an allowance for each birth, the younger generation shuns having babies. The older generation criticizes the young for being selfish. The government pleads them to have children throwing various incentives for birth, child care and education. Yet, there is little sign of any improvement on the population front. Blaming the young for being selfish cannot entirely explain the phenomenon. The answer could be better found in the law of supply and demand.
Korea used to be one of the most fertile, recording six births per woman. The government had to carry out campaigns to contain births with a slogan “Let’s have just two and raise them well.” But people kept on having children. The population shrank after the country suffered a devastating war. Human resources were crucial in rebuilding a nation and pushing industrialization. When the demand was high, the number of family members meant that many had to work to achieve a greater income. The seven million baby boomers are the offsprings of the age when human resources were short during high demand.
It is entirely the opposite today. With the economy slow-moving, the demographic demand has become shorter against the supply end. In the 1980s, college graduates chose companies to join. Recruiters were dispatched to campuses to fight over elite students a year or two before they graduated. But the government and enterprises became complacent without making new industries and jobs when the economy reached a certain level. Because the same industries lasted for nearly half a century, the work front also became aged.
The status quo took its toll on youth employment. The joblessness rate of those aged under their 30s hit an all-time high of 12.5 percent in February. New acronyms are made — cheongshilshin, referring to the young, unemployed and delinquent in credit, and cheongbaekjeon, meaning the golden age of the young, restless and jobless. With the evident thinning on the demographic front, it may be natural for the young to delay or shun having a family in order to keep equilibrium in the age of imbalance in supply and demand.
Yet the government remains oblivious and out of tune with reality. It merely targets to fuel the supply end without doing anything about the demand side. Even as the people are having few or no kids in order to survive in the tough and expensive world, the government is vainly pumping out incentives in child care and support, which will, at the end of the day, worsen the aggravated undersupply in the working population. The government measures on the low birthrate are, in fact, making things worse. There are no effective endeavors to create jobs requiring greater human resources. The business sector carried out a petition to demand the legislative passage of bills related to stimulating the economy. But there has been little progress. We can only conclude that policy makers are neglecting the fundamental solution to resolve low birthrates.
The country requires an entirely new mindset on demographic policy. The United States has a much higher birthrate of 1.89 than Korea not because it has better policies to encourage families to have children but because of the benign cycle in the economy that keeps creating new enterprises and jobs. Of the four U.S. IT behemoths, Google and Facebook were founded by college students, Apple was on the verge of going bankrupt and Amazon was just starting. Now they are among the most valuable companies in the world, helping refuel the U.S. economy.
The young are hanging desperately onto a cliff. They have never been better qualified and eager, and yet jobs remain scarce. Even if they are lucky and work for three years or so, they must manage to sustain themselves for 40 years after retirement. Instead of encouraging people to have kids, the country must build an economic environment where the young can grow with a future. We must not blame the young for not having children. It is us, the older generation, that failed to provide them the adequate conditions. The young are just following the law of supply and demand.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, March 22, Page B8
*The author is the vice chairman of the Federation of Korean Industries.