2024-07-12 02:47:12
OECD ‘2024 Korea Economic Report’
“Private education expenses increase due to competition to build up specs… Total fertility rate of 0.72 leads to population cliff
“Reforms needed to drive the foreign labor market… Improvement of the subsidy system that hinders the growth of SMEs”
The Organisation for Economic Co-operation and Development (OECD) pointed out that the Korean education system is perceived as a ‘life-or-death battlefield’ by students due to the fierce competition to obtain the ‘golden ticket (entrance to a top university)’. It also pointed out that all young people are participating in inefficient competition, which is causing national waste and increasing the cost of raising children, resulting in a population cliff.
On the 11th, the OECD released the ‘2024 Korea Economic Report’ containing such content. Every two years, the OECD analyzes the economic trends and policies of each member country and makes recommendations. This year’s report recommended responding to population decline and improving productivity of small and medium-sized enterprises. This is the first time that responding to population decline has been featured prominently in the OECD’s Korea Economic Report. It is because the birth rate, which is falling without any bottom, is considered to be a serious threat to the Korean economy.
● Falling birth rate in schools that have become battlefields
The report pointed out that Korea’s total fertility rate, which fell to 0.72 last year, the lowest among 38 OECD member countries, was “an extremely extreme result.” The total fertility rate is the number of children a woman is expected to have in her lifetime. If this trend continues, the current parent generation will be three times larger than their children’s generation and nine times larger than their grandchildren’s generation. The labor force will be insufficient, and financial investment to support the elderly population will inevitably increase. The report predicted that Korea’s population will decrease by half over the next 60 years, and that the elderly population aged 65 or older will account for 58% of the total.
The OECD cited the high cost of raising children as one of the reasons for the low birth rate. Last year, the average monthly private education cost per student was 434,000 won, equivalent to 10% of household disposable income. It evaluated the ‘golden ticket syndrome’, which refers to the competition to enter top universities that lead to good jobs, as a national waste. Most students participate in inefficient competition, but only a few of them become winners. The report also mentioned that 8 out of 10 Korean college students perceive high school as a ‘battlefield of life and death’. This rate is higher than that of the US (40.4%), China (41.8%), and Japan (13.8%).
Vincent Cohen, Director of the OECD’s Economic Review Department’s Country Analysis Division, said in a press conference that day, “Korea has the lowest total fertility rate at 0.72, making it an ‘world champion’ in a field where it should not have been unusual.” He continued, “Due to the dual structure of the labor market, competition to build up credentials is taking place, and the cost of private education is also increasing as people chase the golden ticket.”
Previously, the Yoon Seok-yeol government attempted to improve the education system by eliminating “killer questions” from the College Scholastic Ability Test (CSAT) to reduce private education costs. However, the report evaluated that these efforts were not successful. It did not contain fundamental solutions, such as eliminating the dual structure of the labor market. It was found that graduates of so-called “top-tier universities” in Korea earn about 24.6% more than graduates of “low-tier universities.”
There were also opinions that cash support was necessary because the low birth rate was so serious. OECD Korea Economic Affairs Officer John Pareliussen emphasized, “Korea needs to provide a significant amount of cash because the cost of balancing work and family is so great.” However, he added, “That does not mean that cash payments themselves are a panacea. They should be used as part of an integrated plan.”
● “1,600 SME subsidies must be integrated”
In order to make up for the labor shortage, there were also suggestions that, in addition to efforts to boost the birth rate, reforms are needed to attract foreigners to the labor market. According to the OECD’s talent attractiveness index, Korea’s labor market is the least attractive to highly skilled foreign workers. This is because visa regulations for foreign students, entrepreneurs, and high-income earners are strict, and opportunities are limited, with only low-skilled jobs being given. The report said, “We should promote immigration of highly skilled foreign workers and delay the retirement age to expand the economic participation of foreigners and the elderly.”
The report also contained a bitter criticism that generous subsidies for small and medium-sized enterprises are preventing them from increasing their productivity. Director Coen said, “There are a surprising number of 1,646 spiderweb-like (subsidy) support systems supporting small and medium-sized enterprises,” and “If we consolidate them into a small number of programs, we can create a fair competitive environment in the domestic market and encourage the growth of small and medium-sized enterprises.” He said that tax benefits and subsidy payments should be strictly managed so that small and medium-sized enterprises do not fall into the “Peter Pan syndrome” of being reluctant to grow.
Regarding the recent criticism that the government’s tax cut policy could worsen fiscal soundness, Director Cohen emphasized, “We need to find new sources of tax revenue in the long term.” He said, “Korea’s current value-added tax rate is 10%, slightly more than half the OECD average,” and “In the long term, there is a need to raise the value-added tax rate.”
Meanwhile, the OECD forecast that the Korean economy will grow by 2.6% this year. It maintained the same outlook as in May, which was significantly revised upward from 2.2% to 2.6%, which is the same as the government’s outlook and higher than the Bank of Korea’s (2.5%).
Sejong = Reporter Song Hye-mi [email protected]
-
- great
- 0dog
-
- I’m so sad
- 0dog
-
- I’m angry
- 0dog
-
- I recommend it
- dog
Hot news right now
2024-07-12 02:47:12