Trying to make babies
The government will inject 200 trillion won ($170 billion) in about 200 projects over the next five years to boost Korea’s birthrate from last year’s 1.21 to 1.5. According to its third five-year outline to tackle Korea’s challenges of low fertility rates and rapid aging, the government will concentrate more on encouraging marriages and raising of kids instead of merely trying to increase the birthrate through financial child care support. The government came up with new ideas that weren’t cited in a draft unveiled in mid-October. Earlier, the government’s proposal of raising the cap for rent loans for newlyweds was met with scorn. Now, the government proposes to supply 53,000 two-room apartments on affordable rents for newlyweds by creating exclusive neighborhoods in Oryu-dong in Seoul and Hanam, Seongnam, and Gwacheon in outer parts of the capital.
Past public policies on birth and aging were mostly repackaged ideas from other government social policies. Creating exclusive neighborhoods for newlyweds is a refreshing idea. Although the number of residences is not that many and the towns are established in the outskirts, the move could deliver the message that the state is there to support family-making. The measures also included ways to help workers at small and midsize companies and temporary employees raise families more easily. Monthly allowances paid to employers reporting an employee requesting maternity leave would be raised to 400,000 won from a current 200,000 starting in 2017. Temp workers will be sent to make up for the loss in labor in small and midsize workplaces.
But the measures overall fall short of expectations. Baby boomers born between 1955 and 1963 will be joining the senior category from 2020. There is a five-year gap from the time they retire and become eligible to collect monthly national pensions. Even when the government spends 500 trillion won over the next five years, the bulk will go to financing existing programs such as free child care, basic pensions and subsidies for college tuition. It would have just 34 trillion won left for new spending, an increase of 6.5 percent on average per year. While promising to create 370,000 new jobs for the young, the government made it conditional on labor market reform. It promised to allow 4.46 million women who are now out of work to defer payments to national pension insurance fees, but that also is not feasible as the National Pension Fund revision bill has been lost in the National Assembly. Before making pledges, the government should have persuaded the National Assembly first and raised awareness of the issue among the people first.
Some radical ideas for reforming schools and introducing insurance for parents that came up during discussions with the ruling party in October were dropped. The outline also lacked realistic support for people in their 20s and 30s. The government should invite experts from foreign countries that have struggled with demographic challenges to hear their experience and expertise.
JoongAng Ilbo, Dec. 11, Page 34