South Korea Plans Benefits Boost To Rescue Its Population

The South Korean government plans to spend more on parental leave as the country grapples with the world’s lowest fertility rate.

The maximum allowance for each parent who is on parental leave from work is set to rise to 2.5 million won ($1,800) per month from $1.5 million, according to a Financial Ministry statement on Wednesday.

The ministry did not immediately respond to a written request for comment.

The fertility rate, or number of children a woman is expected to have within her lifetime fell last year for the fourth straight year to a record 0.72, down from 0.78 in 2022.

The falling proportion of youth, combined with rapidly aging workforces, in South Korea and its East Asian neighbors have raised concerns over the long-term strain on social safety nets and economic productivity.

South Korean President Yoon Suk-yeol declared the country’s birth woes a “national emergency,” during a meeting he called Wednesday, said Bloomberg, citing his office.

Last month Yoon called for a new government ministry to be tasked with tackling the issue.

The country has already spent nearly $300 billion on initiatives to encourage young couples to have families, from cash subsidies to child care services, but without success so far. Last year, the government extended the parental leave period from 12 to 18 months.

Also last year, the government slashed mortgage rates for new parents. Now, they can apply for a mortgage with a rate between 1.6 percent and 3.3 percent for five years. This rate is about 1-3 percent lower than most bank loans, according to the Telegraph.

The high cost of living is a major reason cited by young Koreans for not having children. According to a survey by the country’s Ministry of Land, Infrastructure and Transport, housing prices in the capital of Seoul were over 15 times higher than the average household income in 2022.

Couples are eligible if they have had a child in the past two years and earn a combined 130 million won ($93,460) per year.

Analysts have also pointed to changing cultural attitudes among younger Koreans toward reproduction are also a factor.

“Young Koreans balance lifestyle choices like hobbies, travel, and self-care with the desire and affordability of having children,” Katherine Moon, a Wellesley College political science professor and senior fellow at the Brookings Institution, previously told Newsweek.

When they make their decision, many women are increasingly taking into account economic difficulties and the traditional expectations of grandparents and other extended family members, Moon said.