The government raised the parental leave allowance, which had only increased by 500,000 won over the past 14 years, by 1 million won to a maximum of 2.5 million won per month this year. The childcare work hour reduction allowance was raised from 2 million won to 2.2 million won, and the flexible working incentive for childcare was increased from 100,000-400,000 won to 200,000-600,000 won.
The government also spared no investment to alleviate the burden on corporations regarding childcare support. The substitute workforce subsidy has been increased from 800,000 won to 1.2 million won, and a new system has been established that provides 200,000 won per month to employers who give incentives to employees who share workloads due to the parental leave of colleagues.
The budget related to this was set at 4.4 trillion won, which is the largest ever, increased by 1.7 trillion won compared to last year, marking a significant push for 'work-life balance' support. This policy received the grand prize in the '2024 Ministry of Strategy and Finance policy MVP' selected by the public at the end of last year.
Jo Yong-beom, the Deputy Director General responsible for the policy at the Ministry of Strategy and Finance, said in an interview with ChosunBiz on the 22nd of last month, 'This year's policy is focused on supporting the decrease in household income during parental leave and reducing the burden on corporations due to employees taking leave, positively changing the perception of marriage and childbirth,' adding, 'I believe that the government's policy intent has been conveyed to the private sector through the largest investment in history.'
He continued, 'For next year's policy, we plan to strengthen employment services such as vocational training to enable employees who have taken leave to balance work and childcare after returning to work, and to expand the reduction of working hours for childcare,' stating, 'We will also consider expanding financial support to further alleviate the burden on employers if necessary.'
Below is the Q&A with Deputy Director General Jo.
―What is the aim of the government's childcare support measures?
"We aim to foster a culture of 'shared childcare' so that mothers are not shouldering the entire burden of childcare at home and fathers can actively participate. We are establishing policies from the perspective that 'children are raised together by the state and parents'. This is because childcare is essentially nurturing the future workforce of the nation. We wanted to create an environment that supports individuals in balancing work and family life, and to enable corporations to adapt their working conditions flexibly."
―The parental leave allowance has increased by 1 million won in one go, after only rising by 500,000 won over the last decade.
"The total fertility rate fell to 0.72 in 2023, bringing the issue of low birthrates to the forefront of societal problems. Concerns about career interruptions for women due to parental leave, and low participation of Namsung in caregiving due to decreased household income during leave have been pointed out as major factors contributing to low birthrates."
It is a problem that must be resolved for the future development of our country, and I believe that 'work-life balance' is the most important factor in overcoming this. In particular, a survey showed that 93.1% of women aged 30-39 cited 'sufficient parental leave allowance' as a necessary condition for childbirth. This is why we have dramatically increased the parental leave allowance to meet public demand."
―Have you referenced advanced countries?
"I cannot say that we referenced any one country uniformly. Even advanced countries have different forms of labor markets from ours and social perceptions regarding pregnancy and childbirth vary."
In determining the amount of the increase, we referred to the income replacement rates of parental leave allowances in major OECD countries such as Germany (66.3%) and Japan (61.3%). (Up until last year, when the parental leave allowance was 1.5 million won, South Korea's income replacement rate was 46.7%.) Due to budget constraints, we saw a maximum increase of 1 million won as a manageable scope."
―There have been criticisms that 'despite spending so much money, we have ultimately failed to increase the birthrate.'
"While we have made significant financial investments to improve the low birthrate issue, it is true that the total fertility rate has shown a continuous decline until 2023. There may be several reasons for this, but I believe that we have inadequately assessed the effectiveness of the policies implemented so far."
The Low Birthrate and Ageing Society Committee (hereafter referred to as the Low-Birth Committee) pointed out that 'the expansion of existing policies was done somewhat mechanically without strict verification of their effectiveness.' It also noted that there has been insufficient effort to provide incentives for corporations to take the lead in solving these issues."
―Some view the proposal to provide 100 million won for giving birth to one child positively.
"Looking at the evaluation of low birthrate policies by Professor Lee Cheol-hee of Seoul National University and the article from the British economic weekly The Economist titled 'Why paying women to have more babies won't work', there are many opinions that simply expanding cash benefits does not have a clear medium to long-term effect on increasing the birthrate. When a large amount of cash is provided at once, there are side effects such as misuse that may arise."
It is more effective to provide support in necessary areas in necessary ways rather than one-time cash provision. It is essential to invest financially in areas closely related to low birthrates, such as work-family balance, childcare support, and pregnancy and childbirth support."
―To effectively utilize these policies, shouldn't the social atmosphere improve as well?
"Overcoming low birthrates requires an effort from the entire nation, so the participation of corporations is crucial. To change societal attitudes, a childcare-friendly corporate culture must be established. According to a survey conducted by the Ministry of Employment and Labor in 2022 on maternal protection, the top item identified for improvement in the parental leave system was 'salary increase (28.9%)', followed by 'peer compensation (17.0%).
Among the policies initiated this year, there is also financial support for living stability during the childcare period, but there are also policies aimed at alleviating the labor costs for employers hiring substitute workers, such as increased subsidies and expanded eligibility. It is expected that the number of cases where employees refrain from taking parental leave due to feeling 'pressured' will decrease through support for sharing workloads with colleagues on parental leave in small and medium-sized enterprises that find it difficult to hire substitutes.
We plan to monitor work-life balance-related initiatives such as parental leave, continuously expand investments, and improve unreasonable regulations felt at the field level through consultations with relevant ministries."
―Will this policy effectively solve the low birthrate issue? What are the objective metrics to evaluate its success?
"The low birthrate is a problem that cannot be solved immediately. However, I believe that the government's intent regarding the largest work-family balance investment in history has been conveyed to the private sector this year.
Given that the conditions for utilizing work-family balance systems have improved, I hope that perceptions regarding childbirth and parenting among parents will change. If coupled with changes in corporate culture, societal perceptions of marriage and childbirth will also improve.
The most objective metric for measuring success is the birthrate. However, the effects of policies will be revealed in the long term through the birthrate. In the short term, it is difficult to measure the effects of policies.
Instead, there are indicators that show the social atmosphere is already turning around due to governmental efforts. According to a marriage and childbirth perception survey conducted by the Low-Birth Committee in September last year targeting those aged 25-49, the proportion of those who perceive marriage and childbirth positively reached 71.5%. This marks an increase of 0.6 percentage points from a survey conducted in March of last year.
The perception of the necessity of having children has risen by 7.1% to 68.2%. The number of individuals taking parental leave, the proportion of Namsung using parental leave, and other usage rates of the system are also major indicators for evaluating success. The government continues to work towards improving the low birthrate problem in the future."
―What policies do you plan to promote next year?
"This year, we focused on strengthening support for leave and vacation; next year, we aim to establish conditions where those on leave can balance work and childcare after returning to work. We will enhance employment services such as vocational training to help individuals who have experienced career interruptions due to childcare re-enter the labor market.
We also plan to expand the reduction of working hours for childcare and specifically support Namsung in actively utilizing flexible working systems. We will also strengthen the role of workplace childcare facilities to support short-term caregiving gaps in case of unexpected schedules such as business trips.
Additionally, we plan to review the expansion of financial support to further alleviate the burden on employers when necessary. Long-term, the goal is to foster an awareness that 'active childcare support benefits corporations, and corporations must take on some social responsibilities.'