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Can South Korea age gracefully?

Image Credit: Brian Hammonds (Flickr: Creative Commons)

We live in a world of acute disproportions, and South Korea proves more punitively disproportionate than most. Whether it is concentrated power afforded to family-based corporate conglomerates – otherwise known as chaebols – who account for 76.5% of the country’s GDP, or the nation sporting one of the highest gender wage gaps out of all OECD countries, recently elected Moon Jae In faces the challenge of mending a myriad of social and economic discrepancies.

One of the most quickly emerging challenges regards its asymmetric demography. Like Japan, the steadfastly ageing society also hosts one of the lowest birth rates in the world.

In 2016, 406,300 babies were born in South Korea - the lowest number ever recorded, and by 2026, it is expected that 20.5% of the population will be above 65 - a steep jump from 12.7% recorded 65 or over in 2014. With increasing life expectancy on one end, and rapidly declining fertility on the other, the calamitous demographic transition has provided large footing for studies like the National Assembly Research Service who forecast the extinction of Koreans by 2750.

But extending life expectancies, coupled with lower fertility rates are a pandemic symptom of modernity, and a common affliction of developed nations. With the dependency of a retired, elderly citizenry weighing on the backs of a shrinking workforce population, other countries are making proactive efforts to diffuse, and soften the effects of this future burden.

Japan for instance has introduced policies to welcome higher workforce participation by women. As the shortage of childcare centers is one of the biggest deterrence factors for women entering work, four years since pledging to fix this problem, Shinzo Abe expresses the cutting of waitlists to zero will be achieved in three years.

In the Dutch context, reducing incentives for early retirement has been a major priority – with the government enacting stricter eligibility criteria for disability assurance. The government has also been able to partially pre-fund the increasing budget costs related to their ageing population, and are even considering to entirely pre-fund these costs with an estimated a budget surplus of 1.25 – 1.5% of GDP over the next 25 years.

Burdened by much larger government debts and economic ills than their Dutch counterparts, how will Moon minimize the effects of this colossal imbalance in the South Korea? Or at least, how does he intend to?

As part of his campaign, the president pledged to raise the basic pension allowance to 300,000 won ($347.50 AUD) to the bottom 70% income bracket of those aged 65 or older, an age cohort of which 45.1% are already living in poverty. Not only this, he also vowed to strengthen service provisions for treating dementia - offering to subsidize treatment fees up to 90%.

In efforts to stimulate marriage and birth rates, Moon has promised to increase paid parental leave from 40 percent to 80 percent of annual income, as well as providing a monthly childcare allowance of 100,000 won ($115.80 AUD) a month for every child aged under 5.

But as well as improving quality of life for the elderly, and encouraging couples to have children, the true weight of the dilemma in mounted on the shrinking labour workforce of the next few decades. Fixing youth unemployment was a major tenet of Moon’s campaign slogans as he vowed to create 810,000 jobs - largely within the public service sector, he also expressed the need to change corporate culture to cut hours worked overtime, as well as raise the minimum wage to 10,000 won per hour (approximately $11.60 AUD). With record high youth unemployment currently idling away approximately 8.2% of Korean talent aged between 25 -29, the future workforce that will have to support the elderly, are merely surviving in an already sluggish economy.

Noble in his intentions, the Moon’s policies have nonetheless have attracted sharp criticism. Where exactly the funds will be drawn from is still vague, and how sustainable the venture is debatable. Broad tax hikes have emerged as sources of funding as the head of the country’s presidential jobs committee Lee Yung-Sup expressed last month that “advanced countries collect around 25 per cent of GDP in taxes...this year [Korea’s] tax burden stands at 19.3 per cent [which] is completely wrong.”

For now, the tilt of the population entering old age has yet to take full effect. And although lofty assuredness and campaign promises expressed by the government are inoculated by the safety of foresight, only time will tell whether such polices will allow South Korea to age gracefully.

Jenny Kim is a final year Politics and International Studies student from the University of Melbourne, her interests focalise around the East Asian region.

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