Owing to South Korea’s record-low birthrate and aging population, it is required to secure new engine for sustainable development, containing growth potential, fiscal soundness. Low birthrate paired with aging population would not only weaken national competitiveness, including reduction in working population, increase in working-age, but also dampen fiscal sustainability by declining revenue along with slower economic growth and shouldering a greater financial burden resulted from expanding welfare expenditure.

Based on in-depth analysis of economic effect and policy direction coping with low birth rate and rapid aging of society, working age population will begin to decline after 2016. Therefore, there are concerns over declining mid to long term growth potential on account of the aging employees. In addition, change in population structure not only impairs financial burden by soaring welfare and social security spending, but also worsens social welfare accompanied by shortage of national pension fund and growing burden on the youth. Therefore, active policy response is imminent in order to abate an impact of aging society. It is necessary to improve fiscal policy against society’s both law birthrate and aging population, including long-term fiscal soundness of social insurance.