{"id":2200966,"date":"2023-05-09T18:24:57","date_gmt":"2023-05-09T09:24:57","guid":{"rendered":"https:\/\/koreapro.org\/?p=2200966"},"modified":"2023-05-10T16:45:41","modified_gmt":"2023-05-10T07:45:41","slug":"how-an-aging-population-and-fiscal-conservatism-are-shaping-rok-defense-spending","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/05\/how-an-aging-population-and-fiscal-conservatism-are-shaping-rok-defense-spending\/","title":{"rendered":"How an aging population and fiscal conservatism are shaping ROK defense spending"},"content":{"rendered":"
Upon assuming the presidency, Yoon Suk-yeol set out to reorient South Korea\u2019s defense priorities, <\/span>reinstating<\/span><\/a> North Korea in his first <\/span>defense white paper<\/span><\/a> as the nation\u2019s \u201cmain enemy\u201d \u2014 a designation abandoned by the previous Moon Jae-in administration.\u00a0<\/span><\/p>\n But Yoon\u2019s inaugural defense budget, approved in Dec. 2022, shares many similarities with Moon\u2019s approach. Yoon\u2019s decision to terminate Moon\u2019s <\/span>light aircraft carrier<\/span><\/a> project is one notable divergence, yet South Korea\u2019s <\/span>reliance<\/span><\/a> on the <\/span>three-axis<\/span><\/a> defense system and various missiles persist.\u00a0<\/span><\/p>\n As Yoon navigates his broader spending ambitions, he must grapple with an aging population, economic uncertainties and his commitment to fiscal conservatism.<\/span><\/p>\n These factors will ultimately shape South Korea\u2019s defense priorities and the delicate balance between domestic and international security concerns under Yoon\u2019s leadership.<\/span><\/p>\n DEMOGRAPHIC PRESSURES START TO BITE<\/b><\/p>\n In late Dec. 2022, Yoon\u2019s first budget passed the National Assembly, allocating $43.2 billion (57 trillion won) to defense, which comprises <\/span>approximately 13%<\/span><\/a> of the total budget and 2.5% of the ROK\u2019s GDP. This 2023 budget represents a 4.4% increase from the previous year. Yet it reveals a critical challenge for the ROK\u2019s defense: manpower.<\/span><\/p>\n Within the defense budget, 70% is dedicated to force operating costs, while the remaining 30% goes to improving defense capabilities. However, of the 4.4% overall increase, force operating cost increases account for <\/span>91%<\/span><\/a>, leaving a mere 9% for defense capability improvements.<\/span><\/p>\n Troop operating costs, a subset of force operating costs, make up 41% of the budget at $17.7 billion (23.3 trillion won), reflecting a 13% increase since 2021, the most significant expansion of any broad segment in the budget at that time.<\/span><\/p>\n By contrast, defense capability expenditures experienced a slight decrease of 0.5% during the same period, falling from $12.9 billion (16.96 trillion won) to $12.8 billion (16.92 trillion won). This shift in spending priorities is intrinsically linked to South Korea\u2019s demographic struggles, with active-duty servicemembers numbering <\/span>500,000<\/span><\/a> in 2022, down from 618,000 in 2018. <\/span>Continued decreases<\/span><\/a> are projected due to dwindling birth rates and a shrinking pool of available conscripts.<\/span><\/p>\n In an effort to slow this downward trend, the government aims to make military service a more viable career path by implementing <\/span>wage increases<\/span><\/a> throughout the armed forces. This strategy intends to entice conscripts to pursue non-commissioned officer (NCO) roles and encourage current NCOs to stay in the military. However, this strategy has so far been <\/span>hampered by populist measures<\/span><\/a> that have emphasized higher pay hikes for conscripts than NCOs, leaving the intended outcome out of reach.<\/span><\/p>\n Moving forward, pressures on the defense budget will intensify. The 2023-2027 midterm defense plan <\/span>estimates<\/span><\/a> an annual defense budget increase of roughly 6.8%. This goal is unlikely to be achieved, but even if Seoul could reach it, it would still fall short of the approximately 7% <\/span>average<\/span><\/a> under former President Moon Jae-in.<\/span><\/p>\n Yoon, a <\/span>fiscal conservative<\/span><\/a> leading a country with a strong reputation for <\/span>responsible<\/span><\/a> spending, faces a <\/span>murky<\/span><\/a> economic outlook. Economic growth in 2023 is <\/span>expected<\/span><\/a> to be around 1.5%, with 2024 expectations already being revised downward. Moreover, the Ministry of Strategy and Finance <\/span>estimates<\/span><\/a> a more realistic average annual defense spending increase of 4% until 2026.<\/span><\/p>\n