Why experts say South Korea shouldn’t just throw cash at the low birth rate problem

By | April 3, 2024

A social worker cares for a baby at Jusarang Community Church in southern Seoul on May 24, 2017. Credit – Jung Yeon-je – AFP/Getty Images

SSouth Korea – the epitome of the world’s demographic decline – has spent some $280 billion over the past eighteen years to address its declining birth rate, which recently fell to a new record low of 0.72 babies per woman in a whole life. It is the result of a combination of factors, but mainly boils down to young Koreans’ frustrations with the high cost of living and poor quality of life. But while handing out cash is the government’s favored approach, experts say just throwing money at the problem isn’t necessarily the best solution.

Since April 2022, the South Korean government has distributed vouchers worth 2 million won (about $1,500) to parents producing their first child, while an additional 3 million won is given for each additional child. In an effort to further subsidize the costs of having and raising children, the government has continued to increase its budget for family financial assistance. The monthly allowance that parents receive for their newborn’s first year also increased to one million won (about $740) in 2024 from 700,000 in 2023. And since 2018, parents have received a handout of 100,000 won ($74) every month for each child’s first years. For a child born in 2024, parents are expected to receive at least 29.6 million won, or about $22,000, from the government for eight years.

Private companies have joined the campaign to increase the birth rate through financial incentives, with some offering thousands of dollars to reproductive workers — themselves incentivized by tax breaks and other government supports for such programs.

“It’s so much easier to take advantage of the cash stimulus and use that policy tool,” Jisoo Hwang, an associate professor of economics at Seoul National University, tells TIME. “I think this has been the easier way for any government to tackle the problem of low fertility.”

But Hwang and other analysts tell TIME that while handouts help, a better approach would be to focus on policies and programs that would address and improve broader quality of life issues. Such measures would bring their own unrelated benefits, but would also indirectly help foster an environment in which young people feel more inclined to have and raise children.

Hwang says policymakers should consider redirecting money from handouts for individuals to improving social services that benefit a larger collective of people. “In fact, rather than handing out small amounts of cash subsidies, it might be more efficient to actually invest in public education or public childcare, and improve its quality and accessibility across the country,” she tells TIME.

It is fair to say that Seoul is taking some steps in this direction to address quality of life issues. Last week the government eased the burden on new parents looking for housing, with households with children aged 2 years or younger eligible for special housing subscription systems where the government pre-allocates apartments through a lottery – a system considered the most cost-effective is considered to. friendly way to buy a house in South Korea, given the high cost of real estate, especially in metropolitan areas. And earlier this year, President Yoon Suk-yeol announced that government-funded after-school care programs for children would be expanded nationwide.

Also last week, Yoon oversaw the launch of a high-speed train that would cut travel time between Seoul and the suburbs to less than a quarter of the original commute. Land Minister Park Sang-woo told Reuters that the new train was seen as another tool that could improve birth rates: “For example, how can someone make time for babies if he has a two-hour journey on the way home? The idea is to give people more free time after work.”

Hwang said the Yoon government’s non-cash approach to addressing the cost of living and quality of life for families indicates that it is taking the issue of declining birth rates seriously. But there is a limit to the extent to which any government will prioritize long-term solutions – more fundamental changes in labor markets and education systems – the results of which will likely only be visible once they are out of power.

At the same time, however, policymakers should be wary of introducing non-cash solutions that could create new problems, said Stuart Gietel-Basten, a demographer and professor of social sciences and public policy at the Hong Kong University of Science and Technology. For example, he says, if the new high-speed train makes commuting easier, companies might expect employees to do more work in a culture where long work hours are already widespread.

There is also likely a limit to how much any of these programs can actually achieve. Demographers have previously warned that once fertility rates fall below a certain threshold, lifting them becomes extremely difficult due to self-reinforcing economic and social mechanisms. In the case of South Korea, authorities optimistically predict that the fertility rate will continue to decline, at least for the next two years, before a slight increase is expected in 2026, which authorities say will continue, albeit slightly, over the next decade. will rise. Yonhap reported in December that Lim Young-il, the head of the statistics agency’s population trends department, attributed South Korea’s current multi-year decline in the birth rate, which he said is temporary, to the sharp decline in marriages at its peak of the COVID-19 crisis. -19 pandemic. Marriages are starting to recover across Asia.

That is not to say that continued investment in family support programs is a waste. “By improving access to childcare, improving access to preschool, maternity leave, paternity leave, etc., it has made people’s lives better,” Gietel-Basten tells TIME. “It doesn’t necessarily have to have increased fertility. Maybe that will happen over time. But that’s not the [only] reason to introduce this type of policy.”

Contact us at letters@time.com.

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