[2024 Economic Policy] Increased Tax Benefits for Companies Hiring Career-Interrupted Women... "Creating a Childbirth and Childcare-Friendly Society"

'2024 Economic Policy Direction: A Vibrant Livelihood Economy'
New Additional Deduction for Hiring Workers with Reduced Working Hours Established

Tax benefits for companies hiring women with career interruptions will be increased going forward. A new deduction benefit will also be introduced for companies hiring workers who have reduced their working hours during childcare periods. The aim is to expand tax and financial support for 'working mom hiring' to create a social atmosphere that is friendly to marriage, childbirth, and childcare.

On the 4th, the government jointly announced the '2024 Economic Policy Direction' containing these details. The government plans to increase the basic deduction of the integrated employment increase tax credit, which reduces taxes for companies hiring women with career interruptions, thereby providing greater tax cuts. Currently, companies hiring women with career interruptions receive a basic deduction proportional to the number of employees hired, similar to youth, disabled persons, and seniors aged 60 and over: KRW 14.5 million for metropolitan area SMEs, KRW 15.5 million for regional SMEs, KRW 8 million for mid-sized companies, and KRW 4 million for large corporations. The plan is to increase these deduction amounts.

An additional deduction will be newly established for SMEs and mid-sized companies hiring employees who have reduced working hours during childcare periods. Companies will be able to receive additional deductions for one year proportional to the number of employees converted to regular positions and those returning from parental leave. The eligible age of workers’ children for childcare period working hour reduction support will be expanded from the current 8 years to 12 years, and the allowable reduction in working hours will increase from 5 hours per week to 10 hours. The usage period will also be extended from a maximum of 24 months to 36 months. The government plans to prepare a ‘Work-Family Balance Support Plan’ by the second half of this year, including these measures to promote women’s economic activities.

Parental leave allowances will also be expanded. The payment method for parental leave allowances will shift from ‘partial deduction’ (15% for public officials, 25% for the private sector) and ‘reimbursement after return to work’ to ‘full payment during the leave period.’ For public officials, the method will change from reimbursing deducted amounts after returning from parental leave starting from the second child to fully paying the allowance during the leave period. For the private sector, reflecting the relatively high deduction rates, the Ministry of Employment and Labor will begin improving the post-leave reimbursement system.

Non-taxation will also be applied to operating expenses for workplace daycare centers and subsidies for outsourced childcare. The child tax credit amount for the second child will increase from KRW 150,000 to KRW 200,000. Additionally, a ‘Childcare Leave Management Indicator’ will be developed to monitor companies’ utilization rates of parental leave support systems and the retention rates of careers after childbirth. Infrastructure will be supported so that companies can include this indicator in their ESG voluntary disclosure standards. Furthermore, a ‘Regional Plus Job Project’ supporting companies with flexible working hours will be established, and the scoring for childcare-friendly management will be expanded in job evaluations for SMEs. Currently, family-friendly certified companies receive an additional 5 points.