It was only 20 years ago that South Korea was so intent on population control that getting sterilized put young couples on the fast track for public housing. Even the army was in on the act, offering a free pass from annual military training to any man willing to shuffle off for a vasectomy.

In the space of a generation, everything has changed. Korea's population is aging rapidly and its workforce is shrinking. The number of people aged 15 to 64 will peak at 37 million next year, and then steadily drop. After the rapid gains in efficiency that saw the rise of industrial powerhouses like Hyundai Motor Co. and Samsung Electronics Co., improvements in labor productivity are also getting harder to find.

Under this mounting pressure, the economy's potential growth rate could slip by a percentage point to 2.2 percent in the 2020s. The government says the next few years may be the last real chance to escape the demographic trap, and President Park Geun Hye's administration will release a blueprint next month for a five-year plan to tackle aging and the low birth rate.