Companies pay hefty fines over providing workplace child care

Economy

Published: 30 Sep. 2023, 15:00

Companies pay hefty fines over providing workplace child care

Children supervised by the workplace childcare center at Buk District of Gwangju play with bubbles at Chonnam National University. [BUK DISTRICT OFFICE]

A handful of well-established startups such as Coupang and Musinsa resort to paying fines as high as 200 million won ($150,000) instead of complying with the government's push to haul birthrates by building a workplace child care center.

The Child Care Act requires business proprietors employing 300 full-time woman employees or 500 full-time workers to establish a workplace child care center.

Fashion e-commerce company Musinsa came under fire from its employees recently when it announced that it would drop plans to establish a child care facility.

“Child care centers are enjoyed by a few lucky people whereas ‘welfare’ refers to something that benefits the majority of the group,” a high-ranking Musinsa official said in an online meeting last August.

“We will be penalized, but paying the fine costs less than running the centers.”

Musinsa CEO Han Mun-il sent a letter of apology to all employees and vowed to run a foster child care program when discontent intensified.

According to a May survey by the Labor Ministry and Welfare Ministry, 91.5 percent of 1,486 companies in Korea that are applicable to the child care facility mandate met the requirement as of last year.

Just over 50 percent had a workplace child care facility in 2015 when the government started to fine up to 200 million won per year against noncompliant businesses.

The ministries announced the list of 27 companies that failed to establish a corporate day care center, which included Coupang Fulfillment Services, Cosmax, Viva Republica, Shinsung Tongsang, Eduwill and Kurly.

Deloitte Korea, EY Hanyoung and Costco Korea were among the six companies that made the list for a second consecutive year.

Names of 109 noncompliant businesses that fell under the exemption category were not disclosed.

Companies claim their workers had no child care center demand. Labor activists have demanded the government impose heavier fines, but the Welfare Ministry is relatively content with the current trend.

The compliance rate first rose above 90 percent in 2018 and has continued to increase since then.

“The key is the extent to which the companies are willing to be considerate of shaping a childcare-friendly social environment,” said Lee Sam-sik, president of the Korea Population, Health and Welfare Association.

Businesses need to perceive child care centers as an investment and establish them with a sense of duty, Lee added.

Other companies quickly picked up the trend and expanded child-related welfare benefits.

Hyundai Motor and its labor union in July formed a task force independent from other company-labor negotiations to tackle low birthrates and provide child care support.

The Hyundai Motor task force on Sept. 12 agreed to extend the number of paid fertility treatment leaves from three days to five and provide unlimited financial aid per treatment that costs under one million won.

Posco allows husband employees to go on leave to accompany their wives in parental diagnoses.

Of the 2,300 people surveyed by the Korean Peninsula Population Institute for Future (KPPIF) in August, 60.2 percent of those who were satisfied with their workplace said they plan on having kids. Of those who were unsatisfied with their workplace, 45.2 percent said they would have kids.

The discrepancy between the satisfied and unsatisfied groups widened among women, with 55.8 percent and 32.6 percent, respectively, saying they plan to have children.

“While government policies are meaningful, birth and child care can only become possible when workplaces change,” KPPIF President Yi In-sil.

“We urge companies to come forward to solve the population problem.”

BY YI WOO-LIM, SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]