South Korea should strengthen its fiscal health to brace for growing welfare demand from the nation’s fast-aging population and protracted low birth rates, the top economic policymaker said Monday.
“Low birth rates and aging population could result in decreasing the number of economically active people and hiking welfare spending, all of which could undercut the nation’s growth potential and worsen its fiscal status,” Finance Minister Bahk Jae-wan told a gathering in Seoul.
“We should prepare ourselves for an aged society by pushing to lower opportunity costs stemming from childbirth and childrearing, encourage elderly people to join economic activities and stabilize the fiscal status of public pensions,” he added.
South Korea is fast becoming an aged society, in which more than 14 percent of the population is 65 or older. Korea became an aging society in 2000, when the ratio exceeded 7 percent.
Experts worry that the aging population coupled with low birth rates poses a serious threat to the nation’s economy as increasing health and welfare expenses for senior citizens could drain its coffers.
In a related move to cope with such a changing demography, Bahk also underlined the importance of keeping the government’s debt level low and fiscal health in good shape, while intensifying efforts to expand the tax revenue base going forward.
