[Opinion] Childbirth Support Funds Are More Needed for Small and Medium Enterprise Employees

“Jeolchejeolmyeong (絶體絶命),” meaning a desperate situation where one’s body and life are both at stake, metaphorically refers to an inescapable crisis. South Korea is currently witnessing such a critical moment. The population decline has reached a point where it is predicted that the nation’s foundation can no longer be sustained. The prospect of national extinction due to population decrease is a future that everyone can feel, even without the insight of global scholars.

The total fertility rate (TFR) fell below 1 in 2018, recording 0.98 at that time. It then sharply declined to 0.92 in 2019, 0.84 in 2020, 0.81 in 2021, and 0.78 in 2022. Last year, it dropped further to 0.72. Looking only at the fourth quarter of last year, it fell even more to 0.65. The total fertility rate refers to the average number of children a woman is expected to have during her childbearing years. Under the traditional marriage system, a TFR of 1 means that a man and a woman meet and have one child.

What is even more bleak is that fewer people are willing to get married. According to Statistics Korea, the number of marriages last year (provisional figure) was 193,673. This represents a 40.0% decrease over ten years compared to 322,807 marriages in 2013. The slight 1.0% increase (1,983 cases) last year was due to postponed weddings from the first half of the year because of COVID-19 being concentrated. By quarter, there was an upward trend from the third quarter of 2022 through the second quarter of last year, but it returned to a decline with an 8.2% drop (3,707 cases) in the third quarter and a 5.5% drop (2,907 cases) in the fourth quarter.

The prevailing view is that the total fertility rate will continue to decline. Statistics Korea’s future population projections estimate this year’s TFR at only 0.68 (based on the median scenario). Considering the rapid decline in TFR and the decreasing number of marriages, there is a high possibility that the actual TFR will fall below Statistics Korea’s forecast.

Booyoung Group’s decision to provide 100 million won in childbirth support to employees who have children sparked a fierce “tax bomb” controversy. Applying existing tax laws, excessive taxes are imposed on the support money given by companies in good faith, greatly reducing the effectiveness of the support. In response, on the 5th, the government decided to apply full tax exemption to childbirth support payments made by companies to employees. Although there was debate over whether to apply income tax or gift tax initially, the government reaffirmed that “childbirth support payments to employees are subject to income tax” and plans to completely remove the current tax exemption limit of 200,000 won per month.

Some voices criticize that the benefits only go to employees of large corporations. Companies capable of providing childbirth support are mostly large corporations or financial institutions with good jobs, and receiving childbirth support further widens income inequality. For employees of small and medium-sized enterprises (SMEs), who suffer from low wages and insufficient welfare systems, childbirth support may seem like a story from another world. A senior government official recently said, “We have heard opinions that childbirth support benefits only large corporation employees, but the government cannot just stand by with folded arms. We hope many companies will take this opportunity to introduce childbirth support systems.”

Population extinction has become South Korea’s greatest challenge, shaking the very roots of the nation. Just as all citizens participated in the gold collection campaign during the foreign exchange crisis, now companies must join the campaign to “have children.” To achieve this, the government, companies, and individuals must all discard their fixed ideas. In particular, the government should provide more substantial incentives to encourage the expansion of childbirth support to SMEs. Perhaps the ultimate goal of the government’s low birthrate policy is to make “living and raising children while working at an SME in the provinces = a happy life.”

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