South Korea: Youth Policy is Family Policy and Integration Matters!
Treating youth success and fertility as separate challenges has led to 40 trillion won in ineffective spending
"South Korea's record-low fertility rate signals a deeper crisis in youth policy," argues Wonshik Kim in a January 2025 working paper for Georgia State University's International Center for Public Policy. His paper, "Exploring the Structural Reform of Youth Policies to Promote Fertility," demonstrates that despite massive government spending on both birth incentives and youth support, rates continue falling because current approaches fail to address the systemic barriers preventing young adults from building stable lives and families.
Policy Evolution & Historical Context
Korea's approach to fertility has undergone several major shifts since the 1980s, when the country transitioned from anti-natalist policies to pro-natalist concerns. The establishment of the Korea Youth Policy Institute (KYPI) in 1989 marked the first institutional recognition of youth issues, though its initial focus remained separate from fertility concerns.
The true pivot came in 2005 with the creation of the Committee on Low Birthrate and Aging Society (CLBAS). Despite being positioned at the presidential level, CLBAS has struggled with limited authority and effectiveness. The committee's role has largely been restricted to justifying increased budgets for various ministries rather than driving genuine policy reform.
In 2020, the government established the Youth Basic Act, representing the first comprehensive attempt to address youth issues. This led to the first consolidated youth policy plan focusing on five key areas: work rights, housing access, education support, welfare improvements, and participation in decision-making. However, these policies rarely explicitly addressed fertility issues, creating a disconnect between youth support and demographic goals.
The result has been a fragmented approach where:
Youth policies focus on individual economic success
Fertility policies emphasize direct incentives
Housing policies operate independently
Education reforms remain disconnected
Employment initiatives lack family consideration
This history helps explain the current ineffective spending of over 40 trillion won across disconnected programs, highlighting the need for fundamental reform rather than continued policy accumulation.
Current State: Key Metrics
Population & Spending
Total fertility rate: 0.78 (2023)
Annual births: 249,000 (2023)
Combined youth/fertility spending: 40 trillion won ($30.8B)
Youth policy budget: 25.4 trillion won across 390 programs
Birth support initiatives: 15.4 trillion won
The Employment Challenge
Key Employment Metrics
Youth unemployment rate: 7.1% (2.5x national average)
Non-regular workers in 20s: 39.1%
Non-regular worker wages: 54% of regular wages
Highest child penalty rate among 135 countries
Highest marriage penalty rate in developed nations
Employment gender gap above OECD average
Structural Analysis
Korea's workplace culture fundamentally undermines family formation through rigid structures and gendered expectations. Women face severe economic disadvantages after having children, compounded by a system that penalizes career interruptions. The impact extends beyond childbirth, with marriage alone creating significant career barriers for women.
Research shows successful reform requires comprehensive changes to workplace culture and policy. This means increasing labor market flexibility while ensuring parental leave doesn't derail careers. Current structures effectively force women to choose between career advancement and family life, contributing directly to delayed marriage and reduced fertility. Without addressing these structural barriers, other policy interventions are unlikely to significantly impact birth rates.
The Housing Crisis
Current State
Housing has become a critical barrier to family formation. Despite massive government spending on housing support (10.4 trillion won in 2023), young adults face deteriorating conditions:
Youth homeownership fell from 21.1% to 13.8% (2017-2022)
81.6% of young households rent
7.9% live in substandard housing
43.9% of newlywed couples own homes
Core Problems
The housing crisis facing young Koreans stems from three interconnected challenges. First, cost barriers have become nearly insurmountable as housing prices dramatically exceed other essential goods. The current financing system forces young buyers to either take on massive debt or rely on external family support, while income-based lending criteria systematically exclude young buyers despite their future earning potential. Even attempts to ease these barriers through gift tax exemptions for parental support have proven largely ineffective.
Space constraints create a second major challenge for young families. The market suffers from limited availability of family-sized units, making it difficult for households to upgrade as they grow. This problem is compounded by inadequate public housing options, forcing many young families to settle for substandard living conditions that aren't suitable for raising children.
Perhaps most troublingly, the market faces severe generational blockage that prevents natural housing circulation. The widespread use of reverse mortgages has hindered the transfer of homes between generations, while limited senior housing options mean elderly households often retain larger homes even as young families struggle to find adequate space. Current policies have failed to encourage downsizing or create effective pathways for intergenerational housing transfer.
The Education Burden
Financial Impact
Private education spending hit 27 trillion won ($20.8B) in 2023, with:
6.5% annual growth in spending
Average monthly spend per student: 43.4 million won
All income groups spending ~7% of income
High school costs growing fastest at 8.21% annually
Systemic Problems
The education system faces deep structural challenges that directly impact family formation decisions. Public education has suffered from steadily declining faith in system quality, with a growing mismatch between parent expectations and actual outcomes. This problem becomes particularly acute as children advance through the system, with deteriorating conditions in higher grades driving families toward expensive private alternatives. The system's limited flexibility and lack of innovation have failed to address these concerns, instead allowing them to compound over time.
The impact on career trajectories has become equally problematic. Young people face increasingly delayed workforce entry due to extended education requirements, with re-enrollment and repeat years becoming disturbingly common. The growing emphasis on language training and additional certifications further extends this delay. Perhaps most concerning, graduate unemployment has created a vicious cycle where young people pursue ever more education to remain competitive, driving additional spending and further delaying family formation.
The Integration Challenge
Current State
Fragmented Support
390 youth policy tasks spread across ministries
25.4 trillion won distributed without coordination
Overlapping functions between agencies
Disconnected implementation
Policy Gaps
Youth age definitions vary by program (15-45 years)
Unclear targeting and objectives
Limited monitoring of effectiveness
Poor connection between programs
Required Changes
Addressing these systemic issues requires fundamental reforms at both structural and service levels. At the structural level, Korea needs to establish a deputy prime minister-level ministry dedicated to coordinating fertility-related policies. This new body must have real power to drive change, including the ability to directly adjust budgets and policies based on measured outcomes. Clear metrics for policy success need to be established and tied directly to birth rate improvements, creating genuine accountability for results.
Service integration represents another crucial area for reform. Current support systems operate in isolation, creating inefficiencies and gaps in assistance. Future policies must deliberately connect employment, housing, and education support to create comprehensive assistance that addresses young people's actual needs. This integration needs to extend from central planning to local implementation, with careful consideration of regional development needs and differences.
Coordination between central and local governments must be strengthened to ensure consistent policy implementation while allowing for regional adaptation. This means moving beyond the current focus on cash benefits to emphasize service quality and accessibility. Programs need to be designed with clear understanding of local economic conditions and development goals, ensuring that support actually helps young people build stable lives in their communities.
A (Proposed) Way Forward
Korea's fertility crisis demands an integrated approach across four critical areas. The labor market must be transformed to increase flexibility and eliminate penalties for family formation, moving beyond surface-level policies to fundamentally reshape workplace culture. Housing reform must create realistic pathways to ownership that match young people's life patterns, including both expanded public options and better mechanisms for intergenerational transfer. The education system requires strengthening to reduce private education dependence while supporting earlier workforce entry. Finally, these reforms must be coordinated through integrated policy implementation that ensures programs work together effectively rather than in isolation.
Bottomline
Korea's experience proves that treating birth rates and youth development as separate challenges has failed. Only by addressing the systemic barriers that prevent young adults from building stable lives can Korea hope to reverse its demographic decline. This requires shifting from fragmented welfare programs to coordinated development policies that create genuine opportunities for youth success.