CEO is concerned about a phenomenon that may have major repercussions on the Asian country’s existence.
South Korea is home to some of the biggest multinationals in the world: Samsung Group (SSNLF) , Hyundai Motor (HYMLF) and LG Corporation.
The country is, with Japan, one of the lands of technological innovations in Asia. It exports its technologies and also its culture, which seems to resonate with the socio-economic divisions that have become universal. Recently it was “Squid Game”, a Netflix series relating the economic desperation of the protagonists, which captured the attention of the whole world.
But what if in a few years there is no one left in South Korea to carry on these traditions of innovation and to capture some issues of our time?
This is the question that seems to preoccupy Elon Musk, the most influential CEO in the world. The chief executive officer of the electric vehicle manufacturer Tesla (TSLA) – Get Tesla Inc. Report now has a personality that goes well beyond business circles. It thus intervenes on the issues that affect the planet regardless of the countries in which they are located.
Musk, who has almost 105 million followers on Twitter, has just sounded a new alert about the continued reduction of the South Korean population. He says Seoul is on track to lose half of its population.
South Korea About to Lose ‘Half Its Population’
It all started with a message on Twitter from Italian cybersecurity researcher Andrea Stroppa, evoking an exceptional measure by the South Korean government to provide each family with a newborn with a monthly allowance of 1 million won (about $700), in its latest initiative to encourage more births and try to combat the lowest fertility rate in the world.
“Interesting move @elonmusk,” Stroppa wrote, commenting a story from Bloomberg that read: “South Korea plans to provide every family with a newborn child a monthly allowance of 1 million won ($740), in its latest move to encourage more births and try to address the world’s lowest fertility rate” //Bloomberg.”
Musk immediately responded: If the tech tycoon welcomes the South Korean initiative, he remains pessimistic about the country’s ability to reverse the trend.
“Important,” the world’s richest man said. “South Korea is currently tracking to lose about half its population roughly every generation. Long lifespan hides the dire nature of the problem.”
Stroppa, however, then questioned the results of financial aid when similar initiatives had not had a big impact in other countries.
“I’m curious if money stimulus is enough to change the trend. In history, similar solutions had a mix results. In Italy, there is a tiny € stimulus but didn’t work at the moment. Let’s see,” he said.
“It will probably help proportionate to the cost of raising children,” Musk commented.
This is not the first time that the mogul has expressed concern about the decline in the South Korean population.
Potential Age Quake Looming
The exchange between the two men sparked many comments on the social network. Many indeed are Twitter users who believe that the South Korean initiative will have mixed results.
“It helps those, who want children to have them obviously. But if someone doesn’t want children it won’t change their mind. The actual amount vs living/child raising cost also matters,” commented one Twitter user.
“I don’t think it will work. Germany gives 200 euros per month for each child and more for each additional child (15 euros), i.e. 215 euros until the child has completed his studies or training,” said another user.
South Korea’s latest birth figures worry demographers and local government. The total fertility rate in South Korea, or the average number of children a woman bears during her lifetime, stood at 0.81 in 2021, compared to 0.84 the previous year, according to recent data from Statistics Korea (Kostat). It is the lowest figure since the statistics agency started compiling related data in 1970. Last year also marked the fourth year in a row that the number was below 1.
The Asian country is the only place where the number of births per woman has remained below 1 among the 38 members of the Organization for Economic Co-operation and Development (OECD). In 2020, the total fertility rate of OECD countries was 1.59 on average.
The decline in births in South Korea is due to the fact that many young people delay or forgo getting married and having babies amid a slowing economy and high housing prices, coupled with changing social norms regarding marriages, experts say.
The country could face an “age quake” from 2030-40 which is an earthquake-like demographic shock due to a declining population and a rapid aging, if the country does not address the problem in a timely manner, the same experts warn.
South Korea’s working-age population is expected to plunge 35% over the next 30 years due to record birth rates and rapid aging, according to a government estimate.