"No Money Left When Taking Parental Leave"...Income Halved

Parental Leave Period Is Long but Income Replacement Rate Is Low

In South Korea, the income replacement rate for parental leave benefits paid to parents taking childcare leave was found to be only in the 40% range, ranking among the lower tier of OECD member countries. Although the available childcare leave period is relatively long, the actual usage rate of childcare leave was also among the lowest.

According to the OECD's 'Family Database' on the 24th, as of 2022, the income replacement rate during childcare leave (the ratio of childcare leave benefits received compared to previous income) in South Korea was 44.6%. Among the 38 OECD member countries, 27 operate similar systems, and South Korea's income replacement rate ranked 17th among them.

In South Korea, childcare leave can be taken for up to one year by workers who have been enrolled in employment insurance for more than 180 days and who are raising children aged 8 or younger or in the second grade or below in elementary school. The childcare leave benefit is 80% of the ordinary wage, with a ceiling and floor of 1.5 million KRW and 700,000 KRW, respectively.

The income replacement rate for childcare leave was mainly high in European countries facing low birthrate issues. Estonia, Slovenia, and Chile had a 100% replacement rate, followed by the Czech Republic at 88.2%, Lithuania at 77.6%, Iceland at 71.3%, Austria at 71.2%, Luxembourg at 67.1%, and Germany at 65.0%. Japan, which faced low birthrate issues earlier than South Korea, had a rate of 59.9%, 15.3 percentage points higher than South Korea.

Parental leave duration (left) and income replacement rate of parental leave pay in OECD member countries [Image source: Captured from OECD Family Database, Yonhap News]

The possible childcare leave period was the 7th longest in South Korea, following Finland (143.5 weeks), Hungary (136 weeks), Slovakia (130 weeks), Latvia (78 weeks), Norway (68 weeks), and Estonia (67.9 weeks). Starting next year, South Korea’s childcare leave period will be extended to 1 year and 6 months (78 weeks), which is expected to improve its ranking.

However, despite the long available period, the actual usage rate of childcare leave is among the lowest. According to the National Assembly Research Service’s 2021 report titled 'The Reality of Childcare Penalties and Improvement Tasks for Guaranteeing the Right to Use Childcare Leave,' the ratio of childcare leave users per 100 births in South Korea was 21.4 for women and 1.3 for men, the lowest among 19 OECD countries with disclosed related data.

Childcare leave users were often employees of large companies or high-income workers. According to Statistics Korea’s 2021 childcare leave statistics, 71.0% of male childcare leave users and 62.4% of female childcare leave users belonged to large companies with 300 or more employees. Furthermore, the 2021 report by the National Assembly Research Service titled 'The Effect of Childcare Leave Income Replacement Rate: Conditions and Tasks for Male Childcare Leave Use' showed that the use of childcare leave by workers earning more than 3 million KRW per month increased 2.55 times from 2015 to 2020, while the number of users earning 2.1 million KRW or less per month decreased by 19.2% during the same period.

The report pointed out, "Since income loss caused by childcare leave is felt more severely by low-income workers, measures to raise the minimum childcare leave benefit should be considered," and emphasized, "It is necessary to increase the general account burden of childcare leave benefit finances."

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