[Exclusive] "Paternity Leave for Dads" Wage Increase up to 4.5 Million Won Proposed with Promise Alone

High-ranking officials propose changing the '6+6 Parental Leave' with post-payment
Suggest applying expanded salary benefits in advance upon promise
"Lacks practicality and effectiveness"... Implementing departments oppose
Credit system reform and special low birthrate fund also face conflicting opinions

The Low Birthrate and Aging Society Committee is pushing for a plan to expand salary benefits up to 4.5 million won by agreement, even if both parents do not take parental leave. They are also discussing a plan to significantly advance the timing of the 'childbirth credit,' which grants additional recognition of the National Pension subscription period upon childbirth. However, controversy is expected over whether the effect on boosting the birth rate will be sufficient, given the anticipated large-scale financial resources required.

According to a comprehensive report by Asia Economy on the 31st, the Low Birthrate and Aging Society Committee is discussing such measures with related ministries to finalize the comprehensive low birthrate countermeasure scheduled to be announced around mid-next month. During the discussions, the committee proposed a restructuring plan for parental leave benefits, focusing on changing the payment timing of the '6+6 parental leave' salary from after the fact to before.

Currently, parental leave benefits are 80% of the ordinary wage, with a monthly maximum limit of 1.5 million won. However, if both working parents take parental leave to care for a child under 18 months old, the ordinary wage limit is increased to 100% for the first six months. The monthly maximum starts at 2 million won in the first month and expands up to 4.5 million won by the sixth month. When parents split the parental leave, the situation becomes complicated. The spouse who takes parental leave first receives the general benefit. Therefore, the government pays the difference after confirming both parents' use of parental leave.

For example, if the mother takes parental leave from January to June and the father starts from July, the mother receives the general benefit from January to June, and from July, the expanded benefit under the 6+6 policy is paid. The benefits the mother did not receive are settled when the second parental leave begins. In practice, there have been cases where parents received less parental leave pay while raising the child and later received a kind of compensation. Because of this, some parents wanted to take shorter parental leave but ended up taking longer leave, risking career interruption to maximize benefits.

To eliminate these issues, the committee proposed applying the 6+6 benefits in advance if both parents agree to take parental leave. The problem arises if one parent does not take parental leave as planned. The state would have to recover the parental leave benefits already paid. Since there is a possibility of moral hazard, detailed policy implementation is necessary. A ministry official pointed out, "The biggest problem is the uncertainty that parental leave plans may change."

Controversy Over Increased Financial Burden of National Pension Childbirth Credit Expected

The committee is also proposing to significantly advance the timing of recognizing the National Pension childbirth credit, and consultations are underway among related ministries. The childbirth credit is a system where the state recognizes the childbirth period as a subscription period for the National Pension to encourage childbirth. Under the current credit system, subscribers who gave birth to a second or subsequent child after January 2008 receive an additional 12 months of subscription period for the second child and 18 months per child from the third child onward at the time of receiving the pension. This benefit is granted after age 63 (current standard), the pension receipt age.

The committee suggested advancing the credit payment timing to immediately after childbirth, with the government paying the pension insurance premiums that workers would have paid during the childbirth period. It has not yet been decided whether the government will cover only the worker's share (4.5%) of the 9% pension insurance premium paid by employees (4.5% by the company and 4.5% by the worker) or the entire 9%. If only the worker's share is covered by the government, the company's burden will increase. Particularly, opposition from small businesses with poor management conditions is expected to be significant.

The scale of financial input is also a key issue. With the recent tax revenue shortage worsening fiscal conditions, advancing the credit could excessively increase the government's burden. A pension expert said, "Advancing the credit recognition period increases the recognized pension amount, which could lead to a long-term increase in additional financial burdens." This could further negatively impact the financial status of the National Pension, which is undergoing reform amid depletion risks.

Conflict Between the Committee and Ministry of Economy and Finance Over Establishing a Special Low Birthrate Account

The committee is also demanding the establishment of a special account dedicated to low birthrate issues, causing conflicts with related ministries. The committee explains that the current low birthrate budget includes many inefficient projects or overlaps among ministries, reducing efficiency, so a separate special account exclusively for low birthrate issues should be created. Since President Yoon Seok-yeol has decided to establish a Low Birthrate Response Planning Department, they argue that such discussions are necessary to coincide with the launch of the new organization.

However, the Ministry of Economy and Finance believes that establishing a special account is unrelated to enhancing policy effectiveness. They point out that apart from the Low Birthrate Response Planning Department receiving its own budget package after its launch, there are no special expected effects. Since there are already funds like the Employment Insurance Fund that bear the cost of parental leave benefits, the special account would have little practical effect beyond symbolic meaning. A ministry official said, "Moving the same budget from the general account to a special account does not necessarily improve effectiveness," adding, "The argument that a special account must be established to overcome low birthrate lacks logical basis."