Seoul, Korea, Thursday 19 October 2017
(As prepared for delivery)
Minister Neunghoo Park, Minister Masaji Matsuyama, President Sangho Kim, Executive Director Dr. Natalia Kanem, Distinguished Guests, Ladies and Gentlemen,
I am delighted to be in Seoul, at the Joint Conference on Low Fertility, Challenges and Responses in the Era of Ageing Population. Let me first take this opportunity to thank our hosts: the Ministry of Health and Welfare and the Korean Institute of Health and Social Affairs (KIHASA). Our thanks also go to the Governments of Japan and China as well as to the United Nations Population Fund (UNFPA) for their support.
Demographic trends are changing society in countries across the globe, but particularly here in Asia. Korea, for example, may be the OECD’s fourth youngest country today, but by 2050 Korea will become the fourth oldest.
The ageing process in Korea is expected to accelerate significantly in the coming decades. In 2015 the ratio between the old-age (65 and over) and the working age (20-64) population in Korea was around 20 for each 100 persons, below the OECD average of 28. This old-age dependency ratio in Korea is expected to quadruple by the year 2075, surpassing those of Japan and China, which are also facing significant challenges from their ageing populations.
Population ageing is like a double-edged sword. It’s good news that we are living longer. But it implies that our populations are shrinking. Today, the population in Korea is almost 51 million, by 2075 it is projected to be around 43.5 million; similarly in Japan, where the population is expected to decline from 127.5 million today to 93.5 million in 2075. This is because people are choosing to have fewer children. In 1960 Korean women had, on average, 6 children over their lifetime. Nowadays, they have only one child, or 1.17 children per woman on average, in statistical terms. It’s the lowest fertility rate in the OECD and well below the 2.1 replacement rate. This brings significant challenges, in particular for public finances, as government spending on healthcare and pensions needs to increase, while the workforce shrinks.
Let’s take a look at what is driving these trends. The increase in educational attainment observed in recent decades – especially for young women – may be playing a role. When transitioning from school to work proves difficult, young adults with good education may postpone parenthood decisions until they have established themselves in a career. This can in turn lead to having fewer children than initially desired. In Korea, for example, nearly 40% of married women with one child in 2007 reported not having a second child within the next three years despite their intentions.
Workplace cultures have not helped. Often, women are still expected to leave employment upon motherhood. But when they remain in employment, the long-hours culture makes it difficult for women and men to reconcile work and family responsibilities. In Korea, about 86% of male employees and 72% of female employees work for 40 hours or more per week, making it difficult to reconcile work and family responsibilities.
These difficulties are exacerbated by other challenges that young people face: finding an affordable home, especially in large urban areas, and the cost of education, especially for private “cram schools” – Hagwon in Korean and Juku in Japanese – that many children often attend from a young age.
Korea and Japan have taken important steps to modernise their social policy, such as providing fathers and mothers with an individual entitlement of one-year paid leave, as well as increasing public investment in childcare. In Korea, such public investment increased almost tenfold over a 10 year period: from 0.1% of GDP in 2004 to 0.9% in 2014. This is progress but it’s not enough!
So what more can policy makers do?
Contrary to what one might expect, combining work and family aspirations can help drive the fertility rate upward. In fact, OECD data show that countries with the highest fertility rates are among those with the highest female employment rates.
Nordic countries and France, for example, have developed a “continuum of supports” to help parents throughout the early years. This means providing paid parental leave, access to affordable and universally accessible pre-school for young children and out-of-school-hours care for primary school children. These policies have been in place since the 1970s, creating a stable family-friendly environment, in which parents feel confident in the decision to have more children. For instance, while both French and Korean women do almost 4 hours of unpaid housework per day, French men help out with housework almost two and a half hours per day, whereas Korean men only contribute 45 minutes of their time, on average!
But norms can change. Germany – another country facing population ageing – has recently introduced a number of reforms to promote better gender balance in paid and unpaid work and move away from the traditional male-breadwinner model, especially in the west of the country. As shown in our Dare to Share report, Germany increased public investment in childcare in the mid-2000s and it reformed parental leave to give fathers strong financial incentives to take paid parental leave for at least 2 months.
And the policies are working.
Germans today display highly egalitarian attitudes towards sharing of parental leave between parents, trailing only behind their Swedish counterparts.
The OECD is on hand to help all Members and Partners in delivering better family policies to promote gender equality. The OECD’s Recommendation on Gender Equality in Education, Employment and Entrepreneurship, already since 2013, as well as the 2015 OECD Recommendation on Gender Equality in Public Life, offer robust measures to tackle gender biases and promote equal opportunities.
Ladies and Gentlemen,
Countries need to implement family-friendly policies, stick with them over time, and encourage workplace cultures to change so that they foster individual and family well-being. This will help tackle the root causes of population shrinking and support more inclusive growth, enabling men and women to balance family life with work.
The OECD’s new report The Pursuit of Gender Equality: An Uphill Battle shows that achieving the G20 target of reducing the gender gap in labour force participation by 25% by 2025 could add more than 3 percentage points to GDP growth here in Korea.
Clearly this is a battle that we cannot afford to lose! Not only in terms of its inclusive growth dividend, but also to help tackle the pressing challenge of population ageing.