[Interview] "Childbirth is a Woman's Decision... Korean Government Should Expand Migrant Workers Rather Than Promote Birth Incentives"

Michael A. Clements, Professor at George Mason University
Proposes 'Malaysia Model' to Expand Foreign Workforce
Suggests 15% Increase in Foreign Labor Over 40 Years in Korea
"Foreign Workers Are Temporary Residents... Less Concern About Multiculturalism"

"Childbirth is a woman's decision, not a government policy decision. To prevent a sharp decline in economic growth caused by low birth rates and aging in South Korea, the government should strongly consider expanding migrant labor as a policy option that has more certain effects than childbirth promotion measures."

Michael A. Clemens, a professor in the Department of Economics at George Mason University in the United States, stated in an interview with Asia Economy on the 1st (local time), "The working-age population supporting one elderly person in Korea will decrease from the current 4-5 people to just one person in about 40 years," adding, "An unprecedented economic shock, never before experienced by any country in world history due to low birth rates and aging, will hit Korea."

Professor Michael A. Clemens of the Department of Economics at George Mason University in the United States is answering questions in a video interview with Asia Economy.

Professor Clemens, who has analyzed the economic effects of international migration policies for over 20 years, has worked at major research institutes in the U.S., Germany, and the U.K., and currently serves as a professor in the Department of Economics at George Mason University and a non-resident senior fellow at the Peterson Institute for International Economics (PIIE). In a report released last July titled "Immigration or Stagnation: Korea's Aging and Economic Growth Today, the World's Future," he predicted that South Korea's real GDP growth rate will decline by 0.85 percentage points annually over the next half-century due to low birth rates and aging. He argued that to prevent this decline, the proportion of foreign workers should be expanded from the current 3% to 15% over the next 40 years.

Professor Clemens emphasized, "If Korea expands the share of foreign workers to 15% of the total workforce over about 40 years, like Malaysia, it can offset half of the expected decline in economic growth rate. Expanding migrant labor is a huge benefit to Korean companies and the Korean economy, and from an economic perspective, it is a direct and effective measure with a much higher success rate and greater progress than childbirth promotion policies."

Below is a Q&A with Professor Clemens.

- How serious is South Korea's low birth rate problem?

▲ To maintain South Korea's population, the total fertility rate (the average number of children a woman is expected to have in her lifetime) must be 2.1. South Korea's total fertility rate was 0.72 last year and is expected to fall below 0.7 this year. It is the lowest among OECD countries. The high birth rates in the 1950s contributed to the remarkable economic growth and the Miracle on the Han River. However, as birth rates decline and aging intensifies, the number of workers per elderly person will decrease from the current 4-5 to just one in about 40 years (South Korea's old-age dependency ratio?the ratio of elderly population per 100 working-age population?is projected to increase from 25 in 2022 to 100 in 2070). If this continues, South Korea's future economic growth rate will be much lower.

- What do you think are the causes of South Korea's world-low birth rate?

▲ According to analyses by experts including reports from the Bank of Korea, the education level of young Korean women is among the highest in the world. Amid conflicts between personal abilities, career ambitions, and social expectations, women are delaying childbirth or choosing not to have children at all. Additionally, alternatives that could reduce conflicts between personal desires and social expectations, such as telecommuting and flexible work arrangements, have not spread as widely in Korea compared to other countries.

- You argued that to maintain economic growth, Korea should fill 15% of its total workforce with foreign workers, like Malaysia.

▲ In 1983, foreign workers made up 3% of Malaysia's total workforce, and over about 40 years, this increased to 15%. Although it has since decreased to around 13%, Malaysia gradually expanded the share of foreign workers over two generations and achieved a very successful and dynamic economy (Malaysia's fertility rate fell from 3.92 in 1983 to 1.8 in 2021. Economic growth rates were 6.25% in 1983, 3.3% in 2021, 8.65% in 2022, and 3.7% in 2023). It is important to understand that expanding foreign workers is crucial for economic growth. If Korea follows Malaysia's path over the next 40-50 years, it can offset half of the decline in growth caused by aging. Since the government can freely determine the scale of foreign workers through the Employment Permit System (EPS), a system for introducing non-professional foreign labor, this is a direct policy lever and has a very high success rate compared to other policy options.

- Malaysia's industrial structure differs from Korea's, so isn't simple benchmarking difficult?

▲ Many foreign workers in Malaysia have been engaged in agriculture, which is a significant difference from Korea, an industrialized economy transitioning to a high-level service economy. However, many temporary foreign workers in Malaysia also work in low-skilled services such as elderly care, childcare, delivery, and warehousing. Korea also needs workers in these sectors, and care services will become very important (currently, the service sector accounts for over 50% of Malaysia's economy, while manufacturing accounts for 25%).

- The influx of high-skilled foreign workers is important. There may be competition among neighboring countries to attract skilled personnel. How do you see this?

▲ Even the influx of low-skilled foreign workers has significant economic effects. The conclusion that expanding foreign workers to 15% over the next 40 years offsets half of the decline in economic growth assumes that all incoming foreign workers are low-skilled. Even in the worst-case scenario, this can bring substantial economic changes. If the influx of high-skilled workers increases, it will be even more beneficial to the economy. Moreover, the inflow of high-skilled workers such as professors, teachers, and researchers is already increasing and is likely to grow further in 40 years. Korea has excellent culture, climate, high quality of life, and as a liberal democracy, it offers a friendly environment for foreign workers compared to neighboring countries. Language is the biggest barrier, but demand for learning Korean in East Asia may increase, and the younger Korean generation's English communication skills are improving, which could lower this barrier as well.

- How can the strong anti-immigration sentiment prevalent in Korean society, one of the obstacles to expanding foreign workers, be overcome?

▲ Foreign workers are temporary migrants. They earn money in Korea but do not intend to establish long-term relationships with Korea, become Korean, or assimilate into Korean society. They plan to return home after earning several times more money than in their home countries through excellent economic opportunities. Koreans often equate the expansion of foreign workers with a multicultural society, but these are not the same. Recent surveys show that favorable feelings toward foreigners are increasing, especially among young Koreans. The changing attitudes of the younger generation toward foreign workers and neighbors are positive.

- What advice would you give to Korean policymakers?

▲ When I meet Korean policymakers, I often hear that Korea is not a multicultural society, and there are negative feelings toward foreign migrants, making it politically difficult to expand migrant labor. However, migrant labor can be expanded gradually, and other countries have also proceeded slowly. Increasing migrant labor inflow is not synonymous with a multicultural society. Compared to childbirth promotion policies and government efforts to increase (corporate) productivity, expanding foreign workers is a policy measure with very strong effects and is much more feasible than many think.