Flaws in the 380 Trillion Won Budget for Low Birthrate and Aging Caught by the Board of Audit and Inspection Radar

Causes of Low Birthrate Include Employment and Private Education Costs, Effectiveness of Public Rental Housing for Newlyweds Also Questioned
Receiving Regional Birth Incentives and Moving to Other Areas, Low Birthrate Issue Influenced by Youth Social Mobility and Capital Region Concentration

[Asia Economy Reporter Ryu Jeong-min] The Board of Audit and Inspection (BAI) reviewed the effectiveness of low birthrate and aging society measures, into which 380.2 trillion KRW was invested from 2006 to 2020, and found numerous loopholes. Cases were also discovered where budgets were allocated to measures with misguided policy directions or evident limitations.

On the 13th, the BAI announced the audit results of the "Performance Analysis of Low Birthrate and Aging Society Measures and the Response Status to Population Structure Changes (Regional and Old-age Income Security)."

According to the BAI, South Korea is experiencing rapid aging due to a low total fertility rate (0.92 in 2019) and high life expectancy (83.3 years in 2019). Based on a sense of crisis, the government established a basic plan for a low birthrate and aging society and invested 380.2 trillion KRW from 2006 to 2020 to implement it.

Board of Audit and Inspection. / Photo by Mun Ho-nam munonam@

From June to October last year, the BAI conducted audits on three matters targeting the Ministry of Health and Welfare, the Low Birthrate and Aging Society Committee, and others. Regarding the performance analysis of low birthrate and aging society measures, 14 recommendations were made; regarding the response status to population structure changes II (old-age income security sector), 12 recommendations; and regarding the response status to population structure changes I (regional sector), 2 recommendations were issued.

First, the BAI pointed out regarding the establishment of low birthrate and aging society measures, "Considering that employment and private education expenses are major factors of low birthrate, it is necessary to strengthen collaboration or linkage with the Ministry of Employment and Labor, the Jobs Committee, the Ministry of Education, and others when promoting low birthrate measures."

Regarding the newlywed couple rental housing supply project, the BAI explained, "Analyzing contract performance of public rental housing preferentially supplied to newlyweds from 2009 to 2019, the supply volume averaged 17,000 units annually, but actual contracts were 8,700 units, resulting in a contract-to-supply ratio of about 51%. The low contract performance is analyzed to be due to small housing areas (36㎡ or less) and location factors that did not consider the living areas of newlyweds."

Examining the infant tuition support project, the BAI explained, "Since 2013, the government has implemented free childcare and education (Nuri Curriculum) to reduce childcare costs, but after-school program fees at kindergartens have increased significantly beyond the inflation rate due to rising labor costs and increased demand, resulting in higher expenses for parents."

Questions were also raised about the effectiveness of childbirth incentive payments. The BAI stated, "Examining the impact of childbirth incentive payments provided by local governments (currently introduced by 14 metropolitan and 220 basic local governments as of 2019) on local populations, it was analyzed that continuous population growth in those localities is limited due to population outflow to other regions after childbirth."

Furthermore, regarding the analysis of old-age income from the basic pension, the BAI reported, "The income replacement rate of the basic pension is projected to range from a minimum of 22.8% (age 35) to a maximum of 30.0% (age 65) by household, but the Ministry of Health and Welfare has not conducted adequacy evaluations or field surveys," and "recommended actively utilizing this for preparing work improvement plans."

The BAI also pointed out issues regarding the 'Response Status to Population Structure Changes I (Regional).' It explained, "Forecasting the future population of 229 cities, counties, and districts, 157 (69%) are expected to reach super-aging around 2047 due to outflow of young people, especially young women, and the young population base that forms most communities is projected to disappear."

The BAI stated, "Despite the overall population decline, concentration in the Seoul metropolitan area is intensifying (53% population concentration in 2067), and young people are expected to continue concentrating in the metropolitan area (55% in 2067)."

The BAI explained, "Low birthrate measures have been mainly promoted to improve childcare environments and support childbirth and child-rearing," and "this audit analysis revealed that South Korea's low birthrate problem is related to social mobility of young people and concentration in the metropolitan area."

The BAI said, "Young people are concentrating in the metropolitan area seeking quality educational opportunities and jobs, and metropolitan youth choose non-marriage or late marriage due to excessive competition and anxiety about the future," and "there is a need to prepare in-depth comprehensive measures through close whole-government cooperation on regional population imbalance issues from the perspective of low birthrate."

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