Parental Allowance of 1 Million Won and 100 Million Won Support Fund, but 'Workplace Daycare' Comes First [K Population Strategy]

(34) Cash Support-Centered Low Birthrate Measures
Cash Support Effective Only for Income Quartile 4
Infrastructure Development Needed First Despite Time Required
Approach Through Mandatory Workplace Daycare and Alleviating Metropolitan Overcrowding

Editor's NoteThe key to solving South Korea's population problem lies within companies. A workplace culture that evaluates employees based on their work regardless of gender and a family-friendly environment are crucial to addressing the K-population issue. While low birth rates result from complex factors, it is important to ensure that burdens at work do not become obstacles that make people hesitate to have children. Asia Economy will visit companies leading family-friendly policies to identify the factors that helped these systems take root stably, and will explore multifaceted solutions with companies that lack practical conditions. Through this, we aim to encourage change starting from companies and analyze the government's role in enabling this. We listen to voices emphasizing that company culture and atmosphere that reduce psychological burdens, rather than financial support, are key, and propose alternatives from various perspectives.

"It was useful, but the future is the real challenge."

Yoon (34, female), living in Changwon, Gyeongnam Province, quit her HR position at an education-related company last July after giving birth to her daughter. Her husband was not in a position to take parental leave, and around that time, Yoon's health also deteriorated, leading to this decision. Although she worried about hospital bills and the cost of formula and diapers, last year she managed with a monthly parental allowance of 700,000 KRW, which was increased to 1,000,000 KRW this year. However, she is already concerned about the period after the parental allowance ends when her child turns 24 months. The nearly 20 years ahead of hospital fees, kindergarten fees, and academy fees for her child are all burdensome. Yoon said, "All parents can relate, but the money spent on children never ends," adding, "No parent can be satisfied with cash support alone, and no one will decide to have children because of it."

Although there are ongoing criticisms that cash support cannot solve the low birth rate problem, the government and local governments are focusing more on cash benefits. Experts emphasize the need to focus on long-term solutions such as infrastructure rather than short-term results.

According to the '2023 Low Birth Rate Awareness Survey' released by the Low Fertility and Aging Society Committee last November, 25.3% of respondents said that expanding work-family balance policies such as parental leave and reduced working hours is necessary. Many also expressed the need for infrastructure development such as care and medical services (18.2%), job and income expansion (16.1%), and raising public awareness (14.6%). Only 9.5% responded that cash support is necessary.

Cash Competition Heats Up... Infrastructure Takes a Backseat

However, government support remains limited to cash and housing environment solutions. In September last year, the Low Fertility and Aging Society Committee announced a budget of 15.4 trillion KRW for this year covering five core low birth rate tasks (care and education, work-parenting balance, family-friendly housing, reducing childcare costs, and health). The largest portion of the budget was allocated to housing, with 8.9732 trillion KRW, a 30.3% increase from the previous year. The government has focused its low birth rate measures on 'owning a home' through support for home purchase and rental loans and improvements to the subscription system. The next largest budget area was reducing childcare cost burdens, with 2.8887 trillion KRW allocated, a 78.1% increase from the previous year. The government's chosen method to reduce childcare costs is the parental allowance paid per newborn regardless of parental income. From this year, the government raised the monthly parental allowance from 700,000 KRW to 1,000,000 KRW.

Local governments' policies to address low birth rates, which have sparked competition, mostly consist of cash support. According to the Ministry of Health and Welfare, out of 1.0809 trillion KRW spent on childbirth support policies by local governments in 2022, 749.7 billion KRW was used for cash support. In December last year, Incheon City announced a childbirth policy called '1 Billion Plus iDream,' which provides 1.2 million KRW annually until age 7 and 150,000 KRW monthly from ages 8 to 18, totaling about 100 million KRW until adulthood. Other local governments responded with even more generous offers. Last month, Geochang County in Gyeongnam Province announced a low birth rate policy to provide 110 million KRW throughout a newborn's life cycle. The policy includes cash support even after adulthood, such as university tuition and marriage congratulatory money, aiming to encourage settlement in Geochang County.

Relatively little effort is devoted to infrastructure development, which requires time and effort. Although there are consistent calls for facilities that directly assist childcare, such as workplace daycare centers, related measures are insufficient. As of last year, the budget for the workplace daycare center installation support project decreased by 57% from the previous year to 13.357 billion KRW. The government explained that the number of workplaces required to install workplace daycare centers decreased, with 1,351 out of 1,486 workplaces fulfilling the obligation as of 2021. However, only 4.9% of all infants and toddlers use workplace daycare centers. According to the Infant and Toddler Care Act, workplaces employing 300 or more female workers or 500 or more workers overall are required to install daycare centers, which is why there are calls to relax this standard. In March last year, Representative Seol Hoon of the Democratic Party proposed an amendment to the Infant and Toddler Care Act to lower the installation obligation to workplaces with 150 or more regular workers, but it remains in the Health and Welfare Committee.

Cash Support Effects 'Minimal'... "Focus on Long-Term Rather Than Visible Results"

Government agencies are aware that cash support is not a panacea. According to the 'Evaluation of Low Birth Rate Policies and Selection of Core Tasks' research submitted to Rep. Lee Jong-sung of the People Power Party by the Low Fertility and Aging Society Committee, government childbirth support policies showed a significant increase in births only among women in the 21-40% income bracket (4th quartile) who are insured employees under health insurance. In other income brackets, cash support did not lead to meaningful effects. For cash support to be effective, it would need to be paid as a lump sum of 10 million KRW, but current government policies are divided into various programs with differing payment periods, reducing their impact. The research team led by Professor Lee Cheol-hee of Seoul National University's Department of Economics pointed out, "Cash support has relatively high short-term effects but may not be effective in the long term."

This is why experts emphasize focusing on changing social structures rather than short-term support like cash. Professor Cho Young-tae of Seoul National University Graduate School of Public Health said, "Unless social problems such as overpopulation in the metropolitan area and excessive competition are resolved, the low birth rate problem cannot be solved," adding, "We need to approach the low birth rate issue from a long-term perspective rather than seeking immediate visible results."

Special Coverage Team 'K-Population Strategy - Gender Equality is the Answer'

Reporters: Kim Yuri, Lee Hyun-joo, Jung Hyun-jin, Boo Ae-ri, Gong Byung-sun, Park Jun-i, Song Seung-seop
Editor: Kim Pil-su, Economic and Financial Editor

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