[In-Depth Look] Intensive Investment in Infancy and Changes in Parental Leave System, What Are Their Effects?

Since 2015, Korean society has entered a full-fledged era of low fertility and low birth rates. The total fertility rate in 2014 was 1.21, with 435,000 births recorded. In 2015, it temporarily increased to 1.24 with 438,000 births. However, in 2016 (1.17·406,000 births), it declined again and has been on a steep downward trend since. In 2020, the total fertility rate was 0.84, with 272,000 births. The annual number of births decreased by 37.9% over five years. It is now an era where a woman does not even have one child in her lifetime. Children born in 2015 are entering elementary school this year. Half of the classrooms these children fill will be empty six years later.

Given this situation, political and social resistance to increasing welfare budgets related to childcare has disappeared. The government has started spending money. Thus, the ‘Infant-focused Investment’ project was introduced. It consists of three project areas.

First is the ‘First Meeting Voucher.’ A voucher worth 2 million won is given to the parents of every newborn. This supports the cost of purchasing necessary items immediately after the child’s birth and must be used within one year from the birth date.

The second is the ‘Infant Allowance.’ Until now, childcare fees were supported when using daycare centers, and child-rearing allowances were given when caring for children at home; these have been consolidated into the Infant Allowance. The childcare fee support remains capped at 500,000 won per month this year. The new Infant Allowance is 300,000 won per month. As a result, the child-rearing allowance has been replaced by the Infant Allowance, increasing the amount to 300,000 won. By 2025, the Infant Allowance paid to parents who directly care for their children will be 500,000 won per month. Regardless of the childcare method, the same support will be provided through the Infant Allowance.

The third is the Child Allowance. Currently, children under the age of 7, that is, until just before entering elementary school, receive a monthly child allowance of 100,000 won. This has been extended to age 8, meaning until the first grade of elementary school. Parents of children who would have stopped receiving the child allowance upon entering elementary school this year will receive the allowance of 100,000 won per month for one more year.

To make support for childcare costs that parents must bear from immediately after birth through infancy effective, the ‘Infant-focused Investment’ project alone is insufficient. Many parents want parental leave during infancy, a period especially important for forming relationships with their children. However, the income reduction caused by parental leave is significant. To create a synergy effect with infant care cost support, a different parental leave system from the current one is needed. The ‘3+3 Parental Leave System,’ which allows both parents to take three months of leave simultaneously, is significant. The maximum amount has also increased to 100% of the ordinary wage, up to 3 million won per month, for both parents.

Will these changes lead to a rebound in the low fertility and low birth rate phenomenon? For now, no. These changes help parents who have already decided to have children or have already given birth. How many people will decide to marry and have children just to receive this money? The changes are meaningful. Expanding support for childcare costs and reforming the parental leave system will contribute to increasing family welfare investment, which is only about half the average of OECD member countries. In particular, it is expected to lead to an expansion of cash benefits, which are currently at the lowest level among member countries. If these changes are linked with comprehensive social reforms such as employment and housing stability, work-family balance, and eliminating discrimination against women as birth agents, the sound of children crying will someday return to Korean society. It is like urinating on frozen feet once. This is just the beginning.

Jaehoon Jeong, Professor, Department of Social Welfare, Seoul Women’s University