“We will continue to do what we can as a company to solve the low birth issue,” Lee Joong-keun, the chairman of Booyoung Group, a Seoul-based construction company, said last week after awarding a total $5.25 million to his employees for 70 babies born since 2021.
Both male and female employees at Booyoung are eligible for a $75,000 payout each time they have a baby — no strings attached.
Other companies in South Korea are offering payments, too — although none quite as generous as Booyoung’s.
This development has come about as South Korea’s fertility rate — the average number of children a woman has over her lifetime — has plummeted to be the lowest in the world, at 0.78 in 2022.
That means the population is aging rapidly. By 2072, half the population will be over 65 — meaning companies big and small will have trouble finding people of working age to employ.
The decline in South Korea’s working-age population, if it continues at the current pace, will build up to an “existential crisis” for the country, said Lee, Booyoung’s 83-year-old chairman.
The payments are designed to help employees grow families without compromising their careers. “The main reasons behind the falling birthrate are the financial burdens of child care and challenges of balancing work and family lives,” Lee said at a company event.
His company’s offer is far more generous than even South Korea’s biggest carmaker, Hyundai Motor, which last year launched a dedicated task force last year to boost employee birthrates. The company is offering up to $3,750 as a payout for each newborn.
Posco, the country’s top steel producer, also offers $3,750 per child in baby bonuses. Posco chairman Choi Jeong-woo last year visited an employee who is raising quadruplets, hand delivering a cash gift and a stroller for the new parents, according to a company statement.
The companies’ efforts have won praise from South Korean President Yoon Suk Yeol, who this week endorsed company actions like Booyoung’s as “very inspiring.”
Yoon urged officials to come up with a plan “tax benefits and other various support measures to encourage these voluntary actions by companies to boost childbirth,” according to his spokeswoman.
In his 2024 New Year’s address, President Yoon underscored the demographic slump as one of the biggest challenges facing the Asian economic powerhouse.
“At a time when the [country’s] growth potential continues to decline due to the low birthrate, we have to make structural reforms to raise the overall productivity of our society,” he said. “We need a completely different approach as we look for the causes and find solutions to the problem [of low birthrate],”
South Korea’s fertility rate has ticked stubbornly downward for years, getting ever further from the replacement rate of two children per woman required to keep a population stable without migration.
The chronically low birthrates have sparked concerns about aging populations — and the health care and pension costs that come with them — and the resulting increase in the welfare burden.
Despite aggressive government efforts, South Korea’s fertility rate is on course to sink further to 0.65 by 2025, according to official estimates by Statistics Korea.
This is largely due to the stress put on women, who face enormous societal pressure and rampant workplace discrimination if they want to pursue a career while having children, experts say. South Korea ranked 105th out of 146 countries in terms of gender parity last year, according to the World Economic Forum’s Global Gender Gap Report.
The country’s population, currently 51.6 million, is expected to decline by 30 percent to 36.2 million. But even worse, the composition of the population is expected to become markedly older.
The prospect of a smaller domestic market, shrinking workforce and economic slowdown is “catastrophic for the public as well as the private sector in South Korea,” said Yoon In-jin, a sociology professor at Korea University in Seoul.
Whether financial incentives can have a positive impact on fertility remains an unanswered question. Cash payouts are not affordable nor sustainable options for many South Korean companies, especially small and medium-sized ones, said Yoon, the academic.
More importantly, South Korea’s male-dominated corporate culture has to fundamentally change in favor of working women, he said. “Korean women will start having more babies if they do not have to sacrifice their career for it.”
Nearly half of South Korean companies disadvantaged workers using parental leave when it came to deciding promotions, according to labor ministry statistics released last month.