Korea needs to increase immigrants fourfold to avoid demographic cliff

Foreigners wait in line at the Seoul Immigration Office on May 17. [Photo by Han Joo-hyung]

South Korea is rapidly approaching a demographic cliff as the country continuously suffers from a low birth rate and an aging population as some warn it could become the first country in the world to lose growth and employment if it fails to open its doors wider to foreigners.

A recent study revealed on Wednesday that if Korea intends to increase its gross domestic product (GDP) by 1 percentage points, it would have to receive four times more immigrants, calling for the country to lower the threshold for foreigners and switch to a Korean-type mosaic society with combined policies on foreign workers and permanent immigrants. Korea’s GDP growth this year is estimated at less than 2 percent, with exports falling and domestic demand remaining sluggish.

According to the study conducted jointly by Maeil Business Newspaper and the Korea Economic Research Institute, if Korea raises its proportion of foreigners from the current 4.5 percent to 13.0 percent, which is the average of seven major countries, by 2042, its GDP growth rate would increase by 0.6 percentage points per annum, which means an influx of 242,000 immigrants is needed every year.

“Our society needs to think more profoundly about the social status and rights of immigrants and treat them institutionally,” South Korean President Yoon Suk Yeol said during a meeting on immigrant policy held on Tuesday. “We should have policies befitting our role and status as a global pivotal state.”

If the current low birth rate and aging population accelerate, the country’s working age population between the ages of 15 and 64 is expected to halve to 17.36 million in 2070 from 37.37 million. If this trend continues, the economic growth rate would drop to 0 percent by 2050 and fall into negative growth thereafter, the study said.

For the current working age population to be maintained without any influx of foreign immigrants, the birth rate must be tripled by 2040. In other words, without immigrants, there is no way to prevent a negative economic growth and a population decline.

In Canada and Germany, which are currently considered strong immigration powerhouses among the G7 countries, immigrants accounted for 21.3 percent and 16.2 percent of the total population, respectively, at the end of last year. If Korea raises its immigration rate to the level of Germany, it would raise its economic growth by an average of 0.8 percentage points every year and by 1.2 percentage points if it reaches the level of Canada, the study said. This means that about 345,000 to 529,000 immigrants are needed each year.

This study was conducted based on the World Bank’s long-term growth model and on the assumption that the country’s population growth rate, economic activity rate and the proportion of the working age population between the ages of 15 and 64 will remain at current levels.