After breaking its record of the lowest fertility rate, South Korea is planning to triple the baby payment allowances and provide birth support in hopes of improving the declining statistics. The government will give a monthly allowance of 1 million won to every family with a newborn baby. The government is hoping the allowance will improve the birth rates.
The government has also introduced extending paid parental leave for both parents to enable more contributions from both parents.
The initiative will begin next year, the starting payout will be 700k won, which will gradually increase by 2024 to the full payment. The budget was proposed this week. As soon as the child reaches the age of one, the allowance will be cut in half and will continue further for only one year.
Korean citizens have nicknamed the allowance “parent pay.”
Parent pay was one of the leading political pledges made by President Yoon Suk Yeol who took office in May this year. In his election campaigns, President Yoon had claimed the low fertility rate as a national “calamity” and the one million won payment is one of his solutions to the calamity.
It is predicted by UN World Population Prospects 2022 that Korea will have the same population at the end of the century as it did in the post-Korean war era during the 1960s.
The new policy has been introduced when the country is implementing fiscal policies that are stringent to rein in the pandemic-era debt. This is due to the urgency to tackle one of Korea’s highest long-term risks.
The former President Moon Jae In had previously implemented a similar policy which involved an allowance of 300,000 won a month, the policy ran under a more expansionary fiscal political setting. This program is now subsumed by Yoon’s.
Currently, Korea has a total population of 51 million. Korea broke its record of the World’s lowest fertility rate as the number of newborn babies per woman slipped from 0.84 in 2020 to 0,81 in 2021. In 2022, Korea has consecutively recorded the same rate as last year. To maintain a balanced baby per woman ratio, a fertility rate of 2.1 is recommended, anything beyond that indicates population growth.
The birth rate in South Korea has been dropping since 2015. 2020 marked the year where the country recorded more deaths than births. As the number of residents dropped, the country experienced the phenomenon of the “population death cross.”
South Korea and the country’s people
South Korean women are mostly independent career-oriented women, so childbirth and marriage happen late in their lives or even not at all. Many South Korean people say, especially women, that they don’t have enough time, money, or emotional capacity to take care of a child. In South Korea’s highly competitive job market, people lay more importance on their careers first.
On the other hand, the number of older people in the country is higher than the youth, so there are only a few citizens who are of working age, the burden of supporting the elderly population is done by filling job positions and paying taxes. This puts immense pressure on the working demographic. The United Nations global health bank has released a study which reports that South Korea is one of the fastest aging nations in the world, topping the list for economies having per capita GDP above 30K USD.
Social campaigns are now urging men to step up in more domestic roles such as childcare and household work. Official authorities are also distributing “new baby vouchers” to encourage more birth rates.
A shrinking population will raise a lot of economical and political problems for South Korea. Older people will result in huge welfare payouts which will take away funds required for economic growth and development and stagnant economic growth.
As the population ages and productivity slows down, the Nation will be hit with the problem of economic stagnation which might be bothersome for one of the world’s biggest economies.
By regional accounts, South Korea’s capital city Seoul has one of the lowest fertility rates, estimated at a rate 0.63 while the governmental headquarters state Sejong has claimed the highest rate at 1.78.
Many Asian countries are moving towards a similar path as South Korea, Japan is also facing the troubles of declining population and low fertility rate, India and China while having a billion people living in their respective countries are also recording low fertility rates. India is currently at 2.20 births per woman and china is at 1.70 births per woman.
