(EDITORIAL from Korea Herald on Nov. 11)

Rising demographic burden

Korea must overhaul education, spending as birth rate falls and population ages

A country can postpone a budget debate, but it cannot defer the arrival of a smaller generation. South Korea will see this change in its classrooms: First-grade enrollment for the 2027 academic year is expected to fall below 300,000 for the first time.

The 2020 birth cohort numbered 272,337, roughly a quarter of the 1.05 million pupils who entered elementary school at the 1968 peak.

The pace of the decline matters. Enrollment fell below 400,000 in 2024 and will drop below 300,000 three years later. Births rose slightly in 2024 and 2025, but those children will not reach school age until 2031 and 2032. Enrollment is projected to fall through 2030.

Treating this as a temporary dip, or relying chiefly on subsidies, mistakes a long-term transition for a short-term policy problem.

The pressure will move from school gates to public accounts. The country's old-age dependency ratio, the number of people 65 and older per 100 working-age adults, stands at 31.3 in 2026. It is projected to reach 68.4 by 2045, the highest among OECD members, and 103.3 by 2070. A smaller workforce will have to fund pensions and care for a larger elderly population.

Much of that bill is prescribed by law. Spending on elderly programs, including basic pensions and long-term care, is projected to rise 28.7 percent, from 25.7 trillion won ($19.2 billion) in 2026 to 33.1 trillion won in 2030. Statutory welfare spending is forecast to reach 256.7 trillion won that year, up 30.8 percent from 2026.

As commitments grow, policymakers will have less room to invest in future growth or respond to downturns.

Education finance reveals a similar mismatch. Local education finance grants are pegged partly to 20.79 percent of domestic tax revenue, with education-tax proceeds added, so allocations rise with tax receipts even as pupil numbers fall. From 2016 to 2025, per-student funding nearly doubled, from 7.16 million won to 13.71 million won, even as the school-age population fell from 6.02 million to 5.13 million.

A revised formula should redirect some resources beyond primary and secondary schools. Part of the funding could support universities and adult retraining as technology shortens the useful life of skills.

School networks need regional planning in cities and remote districts. Blanket closures will leave some children with longer trips to school, but keeping every building open would waste public assets. Teacher- and facility-sharing could preserve access.

Cash support alone cannot resolve the conditions shaping family decisions. Housing costs and career penalties weigh heavily on couples. One-off payments cannot readily alter either.

Dependable childcare and support for replacement staff when employees at smaller firms take parental leave deserve priority. Even effective family policy will not quickly restore the labor force of a generation ago.

A smaller workforce makes participation all the more important. Older adults need more opportunities to remain employed, and women should not face workplace arrangements that penalize long careers.

Flexible work and midcareer training can help, but employers must rethink job design. With fewer workers, maintaining output will depend on higher productivity per employee.

This demographic adjustment also calls for closer scrutiny of public spending. Central and local governments should eliminate overlapping programs and coordinate health and care services to curb duplicated costs. Low-value programs should face regular review, with funding directed to services that deliver clear social returns.

The number of children entering first grade in 2027 was largely set seven years ago. What follows remains a policy choice. Korea cannot legislate a larger generation into existence, but it can decide whether its institutions better serve the population it will have. The demographic trajectory is largely set; the government's response is not.
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