[In-Depth Look] Goodbye, Low Birthrate Budget

There is no single secret to instantly reversing the rapid decline in birth rates and the ultra-low fertility phenomenon with a total fertility rate below 1.3 that has persisted for over 20 years?something rarely seen in other countries. Although a multitude of competing approaches are being proposed, let's start with one thing: saying goodbye to the low fertility budget.

From about 2.1 trillion won in 2006 to approximately 40.2 trillion won last year, the total low fertility budget has amounted to around 225.4 trillion won. However, not all of this is truly a low fertility budget. Let me ask one question. First, are budgets for projects such as university startup fund formation, support for socially customized departments, strengthening the link between education and employment, and resolving blind spots in employment insurance considered low fertility budgets? Second, are budgets for various youth housing supplies, housing support for youth and newlyweds, and customized rental housing for newlyweds low fertility budgets? What about zero medical expenses for infants under one year, creating a safe childbirth environment, expanding infertility support, increasing public childcare centers, and child allowances?

The first category is difficult to consider as low fertility budget projects. The second category is somewhat confusing. The third is generally regarded as low fertility budget. If money spent to create a good environment from birth to adulthood and social entry is included in the low fertility budget, then the first category would also be considered low fertility budget. But by that logic, the entire government budget could be classified as low fertility budget. The second category, such as youth job and housing support, are factors that make deciding to have children easier, but having a job and a place to live does not necessarily mean people will have children. Still, these budgets have meaning as support for the decision-making process regarding childbirth. This is so-called ‘decision support’ budget.

The third category, which directly supports childbirth and caregiving activities, is the core of the low fertility budget. Of the 225.4 trillion won low fertility budget ‘poured in’ until last year, the ‘activity support’ budget?that is, the budget directly spent on raising children?was about 85.3 trillion won. This is about 37.9% of the low fertility budget over the past 15 years. Last year, the low fertility budget was 40.2 trillion won, of which youth housing support was 18 trillion won (44.8%). The activity support budget was only 6.1 trillion won (15.2%). Korean society has actually been frugal with money spent on the very process of having and raising children. This activity support budget is the main component of public family benefits expenditure relative to Gross Domestic Product (GDP) as calculated by the Organisation for Economic Co-operation and Development (OECD). Korea’s family benefits expenditure ranks 32nd among the 37 OECD member countries. Thanks to the introduction of free childcare and child allowances, family benefits expenditure has rapidly expanded in recent years, rising to 1.2% of GDP (in 2018). However, this is only about half the OECD member country average of 2.1%.

Ultimately, to catch up with most developed countries with relatively higher fertility rates, family benefits expenditure must be increased. The concept of the low fertility budget, which is compiled by aggregating budget items by ministry, should be completely abolished, and the proportion of public family benefits expenditure according to OECD standards should be raised. This is because it directly shows how much the state invests in families. Let’s eliminate the ambiguous concept of the low fertility budget, which mixes unrelated budgets, universal social security budgets (decision support budgets), and family welfare budgets (activity support budgets). Then, let’s objectively observe how much Korean society is increasing investment in families and children using OECD standards. After pouring hundreds of trillions of won, it will no longer be possible to claim that there is no effect.

Jaehoon Jeong, Professor, Department of Social Welfare, Seoul Women’s University

This content was produced with the assistance of AI translation services.