Why the Demographic Cliff Is Fueling Korea’s Educational Frenzy? (Korea EdTech Series Pt. 2)
Yesterday night, right before my exacting iPhone reminded me I’ve reached my time limit on YouTube (which let’s be honest, we break our self-promise way too often by clicking the ‘ignore limit’ button), I stumbled upon a video titled ‘Is Korea already on the road to extinction?’. Although I am perfectly aware that blue light messes up with my sleep-wake cycle I just had to. So I ignored the demands of my iPhone and decided to click on the very non-subtle super-clickbaity YouTube video to learn why our country is already on the trajectory to extinction.
If you have recently binged on Netflix’s All of Us Are Dead this news might disappoint you: the video had nothing to do with a zombie apocalypse. But, the message was as alarming.
The video, which was uploaded by Seoul National University’s official YouTube channel, featured Professor Youngtae Cho who is affiliated with the School of Public Health at SNU. In 16 minutes he explained how low birthrates (0.75 births per woman, ’21 Q4 KOSIS) and a negative delta in population YoY is depleting human resources out of provincial cities, creating a skewed over density in Seoul Metropolitan.
Throwing some stats so you have a better understanding of Korea’s demographic shift:
- The birth rate dropped below 1 for the first time in 2018. Singapore, Macau, Hong Kong, and Singapore also have birth rates below 1 but these are all city-states whereas Korea is a country with 9 provinces and 125 cities
- In February of 2021, the total fertility rate was 0.84 but the decline in childbirth quickly picked up speed hitting 0.75 by EoY. Seoul’s birth rate was even worse, with a record low of 0.64
- In the peak of the Baby Boom era, which was also the decade that Korea experienced its explosive economic development (a reference to the Miracle in the Han River from Part 1 of this series), on average each woman had 6.1 children
- ~420,000 babies were born in 1994 in Seoul Metropolitan but that number halved in 2020 with ~270,000 babies born
- The median age in 1994 was 28.8 vs. median age in 2022 hit 44
- The government announced early this month that it will be allocating 1 Trillion KRW annually for 10 years to revive 89 provincial cities to mitigate the overdensity of Seoul Metropolitan and disperse the youth population across the country
- According to the government, the national standard for youth population was from 19–35 years old but the definition of ‘youth’ has changed bumping the last year to be recognized young to 39 years old
What does all of this have to do with education?
When Korea’s population was evenly distributed throughout the entire country, we had distributed government spending to support infrastructure and the advancement of local schools. Lower birth rates, the concentration of top professional opportunities, and top universities in Seoul are a few of the many factors why regional provinces can’t retain younger generations.
Few foolishly believe that the demographic cliff Korea is grappling with will ease the race for admittance in top high schools and universities but they are extremely mistaken. In a trend where schools will not increase their quota and nuclear families consisting of single-child households, the tensioned hopes of each son and daughter getting admitted to the top-of-the-top have heightened.
There has to be a pyramid because without competition society cannot advance. But the problem arises when there is only ONE main pyramid and everyone is rushing to the tip of that single pyramid. This is creating excessive competition and waste of resources — Prof. Cho, School of Public Health @ SNU
Private institutions (aka hagwons) that lure in parents by selling their hacks for higher chances of university admittance are heavily concentrated in Seoul and, for this reason, non-Seoulers are forced to either move to Seoul or send their kids to Seoul for education. And as you guessed, this creates another vicious cycle of youth leaving neighboring provincial cities and more educational opportunities skewed to the capital of the country.
If you are a visual person more than a numbers person, I would recommend you to watch a Korean TV series called Sky Castle. You understand how extreme Korean parents would go to secure their children’s success.
How and where does technology come into the picture?
As explored in the previous post of this EdTech series, spending per child in private education has been steadily increasing and this trend is even more surprising now that we combine the demographic cliff we’ve explored today. Essentially, the equation goes like this:
⬇ children = ⬆ increased education frenzy = ⬆ spending per child
What is next…
Although I was not intended to direct this research to such asphyxiating conclusions, we need to admit that such social constraints do lead to why EdTech startups have been rising and increased funding has been deploying in this sector.
But besides this side of obsessive educational spending, I think EdTech startups can bring other benefits such as rebalancing educational opportunities to students who can’t possibly attend physical private institutions in the Gangnam region or even providing further vocational training to the retired/elder population.
In part three of this EdTech series, I will be exploring the top and rising EdTech startups, the different categories of this market landscape and possibly explore market gaps that hold great potential.
