[Population Cliff]⑦ "Welfare Direction Should Align to Make the Country Better for Raising Children"

Editor's Note 'Q2 total fertility rate 0.75, half of the population over 65 in 50 years, population 21 million in 100 years.' This is the current status of South Korea, which is cited as the first country on Earth to disappear due to rapid low birthrate and aging. Experts point out that policy goals should focus less on raising the fertility rate itself and more on creating a child-rearing friendly environment through care support to reduce the burden on parents for childbirth and parenting. As the working-age population decline is inevitable, it is time to seek a proactive policy shift in response to the population structure reversal. Opinions have been raised that age-differentiated minimum wages, extending retirement age centered on job-based pay systems to utilize elderly labor, and expanding acceptance of foreign immigrants to maintain population and secure workforce should be prepared for the transition to a multicultural society.

[Asia Economy Reporter Boo Aeri] Choi Mo (11), a 4th grader at an elementary school in Gwonseon-gu, Suwon City, plays board games and practices ukulele with friends at the after-school care classroom 'Sangsang Kkumteo' set up at the school. Choi said happily, "I was sad because I could only see my friends on the phone when the COVID-19 virus appeared, but now I can have fun playing and studying together."

Sangsang Kkumteo is a care classroom supported by KB Financial Group. There are calls for policies guaranteeing women's economic activities and childcare support measures to revive the disappearing population. KB Financial Group's support for care classrooms is a noteworthy example of public-private cooperation. Since 2018, KB Financial has signed a business agreement with the Ministry of Education to support elementary after-school care classrooms and national/public kindergartens nationwide, investing 15 billion KRW annually for five years, totaling 75 billion KRW. As of the end of last year, 1,222 elementary care classrooms and 568 attached kindergartens were newly established. The number of beneficiary children reached 36,000.

The elementary care classrooms and national/public attached kindergartens supported by KB Financial can be built using vacant classrooms within elementary schools, making the construction cost relatively low. This also leads to reduced costs for parents. The monthly fee for national/public attached kindergartens is about one-tenth that of private kindergartens. KB Financial plans to create a total of 2,500 classrooms by this year to establish a care environment. Through this, about 50,000 children will benefit from care services. A KB Financial official said, "By solving care gaps, it is possible to improve children's quality of life, reduce parents' burdens, and expand women's labor participation, thereby creating socio-economic added value."

Looking at overseas cases, it is evident that improving perceptions and overall systems related to childcare, one of the major obstacles to women's economic activities, is effective. Germany is a representative example. After unification in 1990, Germany, nicknamed the 'childless country,' now maintains a fertility rate of 1.5 children per person. According to the German Federal Statistical Office, Germany's fertility rate was about 1.58 in 2021. Since Chancellor Angela Merkel took office in 2005, full-day elementary school classes have been expanded, and work-family balance policies have been steadily implemented. The German Federal Institute for Population Research also diagnosed that this was the result of tripling childcare facilities since the early 2000s.

Experts point out that most of the South Korean government's low birthrate measures focus on reducing the costs of childbirth and marriage. According to a study by Professor Hong Seok-cheol of Seoul National University's Department of Economics titled 'Empirical Evaluation of Low Birthrate Response Policies and Future Policy Directions,' last year's low birthrate policy budget reached a record high of 46.7 trillion KRW, and over 200 trillion KRW has been invested over ten years, but South Korea's fertility rate (0.81) remains the lowest globally. Government projects allocated 70-80% of the budget to housing support such as customized rental housing for newlyweds. In addition, 96% of the budget for childcare support projects was spent on cash childcare fee subsidies.

Professor Hong said, "Cash childcare fee subsidies only affect the group that is undecided about having children and have little impact on other groups. Providing subsidies does not necessarily lead to childbirth, so the effect is limited. European countries like France approach this by strengthening state responsibility because parents find it difficult to raise children, which naturally leads to an indirect increase in fertility rates. Welfare policy direction should aim at child welfare and creating a 'child-friendly country' rather than solely focusing on increasing fertility rates."