South Korea Confronts Demographic Decline as Aging Workforce, Shrinking Military, and Rising Health Costs Reshape the Nation

Mikayla Basanese

South Korea is entering a new demographic reality where population decline and rapid aging are no longer looming threats, but are reshaping the nation. Recent data across sectors reveals the scale and immediacy of the challenge, touching everything from the military to the job market and public health.

The country’s working-age population is shrinking rapidly, with employees under 30 now making up a smaller proportion of the workforce at major firms than those aged 50 and above for the first time. The military also has seen a 20% reduction in troops in just six years, driven by a steep decline in enlistment-age men. In parallel, automation and a shift in corporate hiring toward experienced candidates are limiting opportunities for young graduates, further accelerating the workforce’s aging.

South Korea’s social systems are also feeling the strain. Health care costs for people over 65 have surged nearly 40% in four years, consuming almost half of total insured spending and threatening to push the national health insurance fund into deficit by 2026.

While the country recorded rare increases in births in 2024 and early 2025, buoyed by a jump in marriages, the fertility rate remains at 0.75, far below the 2.1 needed to maintain the population. Projections suggest the population could nearly halve by 2100.

Against this backdrop, experts at the APEC 2025 Korea Public-Private Dialogue argued that reversing the demographic curve is unrealistic. Instead, they called for policies that adapt to the new age structure, which would extend working lives, mobilize underused talent such as women and older workers, and deploy AI and automation to sustain productivity.

For South Korea, the shift from combating population decline to building resilience in an aging society is not optional; it is the only viable path forward.

Washington and Seoul Reach Agreement Over Tariffs

Dan Mitchum

South Korea and the United States have taken steps to avert a potential tariff crisis after President Lee Jae-myung’s administration entered negotiations with Washington. The bilateral dialogue, precipitated by sweeping U.S. tariff threats made by President Trump, has yielded a tenuous but significant agreement in recent weeks.

In April 2025, the Trump administration announced 25 percent reciprocal tariffs on South Korean goods, triggering emergency consultations in Seoul. Acting President Han Duck-soo initially appealed for dialogue rather than retaliation, while Foreign Minister Cho Tae-yul conveyed Seoul’s concerns over such levies, emphasizing South Korea’s robust U.S. investments

The two nations announced an agreement on July 30, following negotiations that included technical discussions from June 22 to 27 in Washington. Under the deal, tariffs on Korean imports were capped at 15 percent, rather than the proposed 25 percent, while Seoul pledged $350 billion in U.S. investments and a $100 billion purchase of energy products.

According to Seoul, ministers tasked with negotiating the last-minute trade deal had spent time tailoring their negotiating strategy to specifically align with Trump’s personality by offering effusive praise and keeping messaging clear and concise. The approach reportedly impressed sufficiently to help seal the deal in a negotiation lasting just 30 minutes.

As global projections of U.S. tariffs soared, South Korea’s central bank welcomed the agreement. Bank of Korea Governor Rhee Chang-yong stated that the deal lifts a “huge burden” on economic policymakers, potentially paving the way for interest-rate cuts ahead of the August 28 central bank meeting.

Both leaders are set to meet face-to-face for the first time in Washington on August 25 for a summit expected to refine economic cooperation and address defense and regional security. At the top of Seoul’s agenda are concerns that Washington could demand higher payments for U.S. troop deployments in South Korea amid ongoing tensions with North Korea.

This Week in Korean History

On April 7th, 1973, future president of South Korea Kim Dae-jung was kidnapped by Korean Central Intelligence Agency operatives in a Tokyo hotel. An opposition candidate and pro-democracy activist at the time, Kim’s kidnapping was prompted by the Park Chung-hee regime’s suppression of opposition parties and push to institute the Yusin Constitution which broadly increased Park’s executive power while removing presidential term limits.