"Willpower Exists But..." SMEs Challenging Childcare-Friendly Policies Face 'Dilemma' Due to Workforce and Cost Issues [K Population Strategy]

(30) Mirae Dosigeonseol Applying for Family-Friendly Certification
Expecting to Solve High Turnover Rates When Achieving Work-Family Balance
Colleagues' Workload Increases During Parental Leave... Practical Support Measures Needed

Editor's NoteThe key to solving South Korea's population problem lies within companies. A workplace culture that evaluates employees based on their work regardless of gender and a family-friendly environment are crucial to addressing the K-population issue. Although low birth rates result from complex factors, it is important to ensure that workplace burdens do not become obstacles that make people hesitate to have children. Asia Economy is visiting companies leading family-friendly policies to identify the factors that helped these systems take root stably, and will explore multifaceted solutions with companies that lack practical conditions. Through this, we aim to encourage change starting from companies and analyze the government's role in enabling this. We listen to voices emphasizing that company culture and atmosphere that reduce psychological burdens are more critical than financial support, and propose alternatives from various perspectives.

On the 30th of last month, Lee Hyung-yong (left), CEO of the small and medium-sized construction company Mirae City Construction, and Park Sang-cheon, head of the legal team, explained the difficulties in preparing for work-family balance. Photo by Jo Yong-jun jun21@

On the 30th of last month, at the office of Mirae City Construction, a small and medium-sized construction company located in Mapo-gu, Seoul, visitors were greeted by a bright atmosphere that broke the stereotype of a macho environment filled with loud voices. The office furnishings were unified in white tones, and the partitions between desks were not high, creating a sense of openness. Employees did not shout over the partitions but quietly approached their colleagues to speak. Soft classical music flowed gently from speakers mounted on the ceiling. "Nice to listen to music, right?" Park Sang-cheon, head of the legal team at Mirae City Construction, smiled as he opened the door to the meeting room where the interview was held. "This place used to be nicknamed the military barracks."

Mirae City Construction applied for the Family-Friendly Certification from the Ministry of Gender Equality and Family last May. The Family-Friendly Certification is a system established by the ministry since 2008, awarded to companies that create an internal environment where employees can balance work and family life. Given that only 18 out of 225 total employees are women, Mirae City Construction seemed far from achieving work-family balance. However, CEO Lee Hyung-yong firmly shook his head regarding this. He said, "It is an era where men also take part in childcare," adding, "I learned about the Family-Friendly Certification when my second child, who was still under eight years old and in the midst of childcare, and naturally became interested."

A Small Construction Company Once Focused Solely on Winning Contracts... Now Challenging Work-Family Balance

CEO Lee Hyung-yong of Mirae City Construction being interviewed by Asia Economy. Photo by Jo Yong-jun jun21@

Although the Family-Friendly Certification has been in operation for over ten years, it remains unfamiliar to many small and medium-sized enterprises (SMEs). As of last year, only 4,110 SMEs had received the certification, which is about 0.05% of the total 7.714 million SMEs. Particularly, small construction companies show little interest in the certification itself. Since their business depends on winning contracts, work-family balance seems out of reach. At Mirae City Construction, over 90% of employees literally put their "lives" into securing contracts, the company's core revenue source. Welfare systems for work-family balance and dedicated personnel for managing such systems were neglected. The only welfare concern was the safety of on-site construction workers.

Nevertheless, Mirae City Construction applied for the Family-Friendly Certification to establish welfare systems related to work-family balance. They expected that realizing work-family balance would help solve the high turnover rate of 20%. Half of the employees who quit each year left within 2-3 months because they could not endure the intense workload. Each time, hiring new employees incurred additional costs and increased the workload for remaining staff to a burdensome level. Park, who led the certification effort, said, "In the past, if additional work was assigned, employees had to do it unconditionally, but nowadays, the younger generation quits without hesitation if work-family balance is not possible," adding, "In the midst of a labor shortage affecting all SMEs, we needed a differentiator from other small construction companies."

The government is also paying attention to SMEs striving for work-family balance. At the end of last year, Minister Kim Hyun-sook of the Ministry of Gender Equality and Family visited Mirae City Construction’s headquarters to listen to employees struggling with work-family balance issues. CEO Lee said, "The minister and officials came and heard the employees' difficulties," adding, "In a natural atmosphere, Mirae City Construction employees candidly expressed their challenges."

Mirae City Construction recently began receiving consulting for the Family-Friendly Certification upon the ministry's recommendation. Companies undergoing consulting prepare for evaluation by revising company regulations, personnel, and labor management, and designing flexible work systems. CEO Lee described it as "a kind of personalized tutoring," explaining, "Many of the certification criteria are qualitative, but they tell us quantitatively and specifically how much to fulfill and promote."

SMEs Face Workforce and Cost Challenges... "Practical Support Needed"

However, CEO Lee shook his head, saying there is still a long way to go before obtaining the Family-Friendly Certification. To receive the certification, companies must submit data such as maternity leave and parental leave usage rates, but compiling such statistics is a manpower burden and a significant expense for SMEs. He said, "There is no dedicated staff or system for these statistics within the company. Ultimately, this leads to overburdening existing employees or hiring new ones," adding, "I feel the government may have designed this system mainly with large companies that have segmented personnel management in mind."

Costs related to welfare systems such as work-family balance are also burdensome. They are considering supporting employees' children's tuition fees but find it difficult to decide the amount, considering possible economic downturns. They must also decide from which years of service to provide support and whether to cover tuition itself or only loan interest. Park said, "Mirae City Construction has no history of wage arrears for 40 years and has various affiliates, so the burden is relatively light," adding, "Other SMEs would find it hard even to dream of such welfare systems."

In fact, many companies find workforce and cost issues arising from work-family balance systems burdensome. According to the Ministry of Employment and Labor's '2022 Work-Family Balance Survey,' 25.3% of surveyed workplaces cited increased workload for colleagues and managers due to parental leave as the top managerial difficulty. Following that, 15.9% and 15.7% of workplaces reported increased labor costs and difficulties in hiring replacements, respectively. These difficulties were more pronounced in SMEs than in large companies. Among workplaces with 10-29 employees, 67.3% reported managerial difficulties due to parental leave, which is over 5 percentage points higher than workplaces with 300 or more employees (61.8%).

The burden on SMEs has led to a decrease in parental leave usage rates among employees. According to the '2022 Parental Leave Statistics' released by Statistics Korea on the 20th of last month, the maternal parental leave usage rate in workplaces with 300 or more employees was 79.2%, but only 62.6% and 32.7% in workplaces with 5-49 and 4 or fewer employees, respectively. Paternal parental leave usage rates also declined as company size decreased. The paternal usage rate was 9.3% in workplaces with 300 or more employees, compared to 4.5% and 3.2% in workplaces with 5-49 and 4 or fewer employees, respectively.

It is also common for employees not to fully return to work after using parental leave. According to data submitted by the Ministry of Employment and Labor to Im I-ja, a member of the National Assembly’s Environment and Labor Committee from the People Power Party, as of July 2022, the employment retention rate within one year after parental leave ended was about 71.1% for employees of SMEs (fewer than 300 employees). This means that 3 out of 10 employees who took parental leave at SMEs left the company within a year. In contrast, during the same period, 88% of parental leave users at large companies with 300 or more employees maintained employment insurance for more than one year.

This is why practical support measures for SMEs considering work-family balance are necessary. SMEs that have received the Family-Friendly Certification are granted benefits such as the certification mark from the Ministry of Gender Equality and Family, 5 bonus points in employment creation grant competitions, a 0.1% reduction in guarantee fees from the Korea Technology Finance Corporation’s technology evaluation, and bonus points when selected for overseas marketing support. Employees of these companies can also use hospitals, hotels, performance venues, and local government facilities at discounted prices. However, in the field, it is emphasized that support directly linked to sales is necessary for companies to actively pursue the Family-Friendly Certification. For small construction companies, a definite bonus point in Public Procurement Service facility construction bids is an incentive. CEO Lee said, "Large companies participating in Public Procurement Service projects want to include small construction companies with bonus points in their consortiums," adding, "Small construction companies generate sales by participating in consortiums. If the Family-Friendly Certification leads to many bonus points in Public Procurement Service projects, many small construction companies will strive to establish systems for work-family balance."

"Just Challenging Work-Family Balance... We Achieved Changes in Corporate Culture"

"Even if we don't receive the Family-Friendly Certification, it is not a failure." Park said that welfare systems related to work-family balance began to improve after applying for the certification. Mirae City Construction has budgeted to provide a childbirth subsidy of 1 million won to employees who give birth starting next year. They are also preparing funds to establish child tuition support and loan systems. They plan to trial tuition support for one or two employees immediately.

There was also a side effect of changing the previously rigid corporate culture. Like other small construction companies, Mirae City Construction had worked in a vertical and somewhat stiff atmosphere. When an employee quit, the company was more focused on replacing them like "fitting a part" rather than improving conditions. After applying for the Family-Friendly Certification, lunchtime was moved earlier from 12:00 PM to 11:30 AM. Although this had been the schedule for 40 years, employees’ requests for flexible meal times were accepted. The dress code, which insisted on semi-formal attire only, was also relaxed.

Park said, "This was an expected effect," adding, "I believed that without external shocks, it is difficult to change corporate culture. This Family-Friendly Certification application became an opportunity for the corporate culture to soften." He also added, "Although the changes are certainly smaller compared to large companies or startups, even small changes are precious to our company. We will strive to bring about more changes."

Special Coverage Team 'K-Population Strategy - Gender Equality is the Answer'

Reporters: Kim Yuri, Lee Hyun-joo, Jung Hyun-jin, Boo Ae-ri, Gong Byung-seon, Park Joon-yi, Song Seung-seop
Kim Pil-su, Economic and Financial Editor