[Why&Next] 180,000 parental leave users receive 3.6 trillion won... "Funding structure must be redesigned" amid depleted Employment Insurance Fund

Forum on Parental Leave Outcomes and Sustainable Funding Structures Held on the 26th
"We must explore diverse funding options, including general taxation and new funds"
Japan separated the accounts by revising the Employment Insurance Act in 2020

Kim Younghun, Minister of Employment and Labor, visited Sosohansotong Company on January 26, which pioneered the "10 a.m. start time during childcare," and presented gifts to employees' children. 2026.01.26 Photo by Yoon Dongju

"The total amount of parental leave benefits increased from 1.2 trillion won in 2020 to 3.6 trillion won last year. It is difficult for the rapidly rising expenditures to be covered solely by the increasingly depleted Employment Insurance Fund. We need a social discussion on securing separate funding sources." (Jung Sungmi, Research Fellow at the Korean Women's Development Institute)

As the number of people taking parental leave surpassed 180,000 last year, concerns have been raised that there are limits to financing the system solely through the current Employment Insurance Fund. Given that the fund is already depleted, experts argue that funding sources must be diversified, such as through general taxation and the creation of new funds, in order to prevent premium hikes for the 13.8 million workers who pay into the system.

Number of parental leave users jumps 40% in one year after benefits increased and leave period extended

The Ministry of Employment and Labor held a forum titled "Performance of the Parental Leave System and Sustainable Funding Structure" at the Royal Hotel in Jung-gu, Seoul on the 26th. The forum was organized to review the performance of the parental leave system and discuss a sustainable funding structure at a time when responses to low birthrates and support for work-family balance are emerging as national priorities.

The number of recipients of parental leave benefits reached 184,329 last year, an increase of 52,000 (39.1%) from the previous year. Compared with 10,000 in 2005, this is more than an 18-fold increase. Even compared with 87,000 in 2015, 10 years ago, the figure has more than doubled.

In particular, the number of male recipients reached 87,000 last year, accounting for 36.5% of all parental leave users, the highest level ever. In 2020, the share was 23.5%. This means it has risen by 13 percentage points in five years.

The reason the number of people receiving parental leave benefits increased by nearly 40% in just one year is that the government has significantly strengthened childcare support programs. The maximum monthly parental leave benefit was raised from 1.5 million won to 2.5 million won, and when both working parents take parental leave together, the leave period was extended from the previous 12 months to up to 18 months.

Research Fellow Jung Sungmi, who attended the forum, evaluated, "As a result of strengthening the 'daddy bonus' scheme and joint caregiving by couples, male participation has increased, and we have taken a step closer to making parental leave a universal practice."

Kwon Changjun, Vice Minister of Employment and Labor, attended and spoke at a forum on the performance of the parental leave system and the search for a sustainable funding structure on the 26th. Ministry of Employment and Labor

"Employment Insurance Fund alone is not enough... To sustain the成果, we must redesign a sustainable funding structure"

While the成果 is clear, the limitations are also evident. As the activation of the parental leave system has caused fiscal expenditures to expand rapidly, a red flag has been raised over the fiscal soundness of the Employment Insurance Fund. Currently, parental leave benefits are paid out of the unemployment benefits account within the Employment Insurance Fund, and expenditures have surged from 1.2121 trillion won in 2020 to 3.6292 trillion won last year.

As a result, spending on maternity protection and childcare support programs within the unemployment benefits account - including maternity leave benefits, parental leave benefits, and reduced working hours during the childcare period - increased from 11.2% of the account in 2020 to 24.5%.

Jung noted, "As spending on maternity protection within the Employment Insurance Fund has surged, concerns are mounting over fiscal soundness," adding, "Although transfers from the general account have been expanded from 180 billion won in 2020 to 550 billion won in 2025, this is not sufficient compared with the scale of the increase in parental leave expenditures." As of the end of last year, excluding borrowings, the Employment Insurance Fund was running a deficit of over 4 trillion won due to a surge in spending triggered by the COVID-19 crisis and expanded coverage.

Kim Seonae, Head of Employment Policy at the Korea Enterprises Federation, also said, "So far, the parental leave system has primarily developed by focusing on raising benefit levels, but we now need to review it with a sense of crisis about whether the finances can withstand it," and added, "In the end, I am concerned that this will act as a factor leading to higher employment insurance premiums."

A daycare center in downtown Seoul. The Asia Business Daily database

Experts unanimously argue that, for the system to continue delivering成果, the Employment Insurance-centered funding structure must be redesigned. Park stated, "To secure sustainable finances, we need to review various options such as separating out a dedicated account within the Employment Insurance Fund, creating a new fund, expanding support from the national treasury, and utilizing other funds."

In Japan, as in Korea, parental leave benefits were originally paid out of unemployment benefits. However, as the number of users increased and budget pressures mounted, Japan revised its Employment Insurance Act in 2020. Under the redesigned scheme, the parental leave benefit account was separated from the unemployment benefits account within the existing Employment Insurance Fund, and one-eighth of the funding is now covered by the national treasury.

At the forum, participants also pointed out that the current parental leave benefit policy fails to cover non-standard workers such as dependent contractors and freelancers. Because the funding source is employment insurance, support is concentrated on wage workers, resulting in blind spots. According to Jung, there are as many as 71,000 people who fall into this gap, including temporary and daily workers with children aged under one, single-person self-employed workers, and those who left their jobs within one year before or after childbirth.

Yoon Dongyeol, Professor of Business Administration at Konkuk University, explained, "Since parental leave benefits are linked to core population policy, the system must be designed to encompass all working parents."

Kwon Changjun, Vice Minister of Employment and Labor, who attended the forum, said, "The increase in the number of people receiving parental leave benefits is clear evidence that the system is changing what happens in workplaces." He went on to say, "Childcare support benefits are not a cost, but an investment in the future of the Republic of Korea," adding, "For that investment to continue, cooperation from the entire society is needed."

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