copy the linklink copied!1. Rejuvenating Korea: Policies for a Changing Society

This chapter provides an overview of the main findings from the review. It briefly illustrates changes in Korean society, in Korean households, in marriage, and in fertility. It discusses the role of various factors such as the fierce competition to get ahead in education, and at a later stage, to get access to the best jobs, the strong division in the labour market between regular workers with job security and low-paid, non-regular workers, and issues around affordable housing.

The chapter concludes with a discussion of the dynamic Korean policy response, which includes the rapid development of an extensive Early Childhood Education and Care system that is widely used and a parental leave system that is not. The chapter ends with a summary of policy recommendations that may contribute to a rejuvenation of Korean society.

    

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

copy the linklink copied!1.1. Korea: A changing society

Since it emerged from the ravages of war in 1953, Korea has gone through remarkable economic development, and it has become the ninth largest economy in the world (OECD, 2019[1]). Over the same period, Korean parents have invested heavily in their children’s life chances and the Korean population has become one of the most highly educated in the world (OECD, 2016[2]). Simultaneously, improved wealth and access to health care have contributed to rapid gains in life expectancy, which at just over 82 years, is now 2 years above the OECD average (OECD, 2019[3]). However, total fertility rates have dropped from six children per woman on average in 1960 to just below one child per woman in 2018. The persistently low fertility rate is transforming society, contributing to the fastest population ageing in the OECD, which in turn will leave a range of socio-economic policy challenges.

Korea’s output growth under the traditional model of export-led manufacturing growth driven by large business groups (Chaebols) is slowing down towards the OECD average. At USD 40 000 per annum per capita, income is close to but below the OECD average of USD 44 000 (OECD, 2019[1]). The benefits of economic growth have not been shared evenly in Korea, and income inequalities are wider than in the OECD on average (a Gini coefficient of 0.35 against 0.31). At 17.4%, poverty rates are well above the OECD average (11.5%), with more than 4 out of 10 elderly people living in poverty (OECD Income Distribution Database).

These income inequalities are related to the limited redistributive power of the Korean tax/benefit system (OECD Income Distribution Database) and the profound divide in Korea’s labour market between “regular workers” who benefit from job stability, seniority-based earnings progression and access to social protection coverage, and non-regular workers with fixed-term contracts, limited earnings growth and restricted access to social protection. In turn, labour market dualism is related to the product market dichotomy between the Chaebols and the large number of small medium sizes enterprises (SMEs). The dominance of the Chaebols across a wide range of economic sectors, stifles the growth of smaller firms and polarises the country economically and socially (OECD, 2019[4]). Korea has a large share of workers employed by small businesses providing low-productivity services, and a high share of self-employed workers (OECD, 2018[5]). Productivity in smaller manufacturing firms is now less than one-third of the productivity of large firms, resulting in a wide wage dispersion between workers in SMEs and Chaebols (OECD, 2018[6]).

The prevailing long working hours culture in Korea makes it difficult to reconcile work and family life, and this contributes to female employment rates being below the OECD average. Labour market dualism makes it difficult for women to return to regular employment after a period outside the labour force. Since women are under-represented in regular jobs, Korea has some of the highest gender pay and employment gaps in the OECD (OECD Gender Data Portal). Labour market dualism also inspires sharp competition for the number of available regular jobs for labour market entrants. As young people find it difficult to establish themselves in stable careers, they postpone starting a family.

Competition for good school and university places that provide access to secure and well-paid careers starts early in Korea. Even before primary school, many parents invest in supplementary, private education to position their children as well as possible for entrance into Korea’s most prestigious schools and universities. In fact, Korean parents and their children enter an educational struggle to get ahead that involves daily participation in schools, after-school programmes, and private tutoring schools or Hakwon, as well as homework. Children spend a considerable amount of time in school and/or studying: on average around 5 hours per day in school and about 5 hours per day studying outside school hours for children in primary school. Thus, Korean parents face education costs that are well above the OECD average, and these are often regarded as a barrier to having (more) children.

The widespread increase in educational attainment and wealth has contributed to changes in attitudes and expectations. More people now wish to pursue both labour market and family aspirations, and expect a quality of housing that is well above that of previous generations. In many ways, Korean policy has responded to these changes, e.g. by rapidly developing an extensive childcare system, while in other areas, such as the coverage and use of parental leave, the response has been less effective. The challenge is now to extend the scope of policy response in areas where it has been limited and to sustain policy reform in the areas where achievements have been considerable.1

copy the linklink copied!1.2. The changing face of Korean society

Population ageing, generated by persistently low birth rates and increased life expectancy, is changing the face of Korean society. Korea’s total fertility rate (TFR) fell below two children per woman in the mid-1980s, and since the start of the millennium has declined further, from around 1.5 children per woman in 2000 to 1.1 children per woman in 2017 (Figure 1.1). Preliminary numbers for 2018 suggest Korea’s TFR has fallen below one child per woman for the first time. This would be the lowest total fertility rate in the OECD by some margin.

The decline in the TFR is related to many young Koreans postponing parenthood, and the mean age of women at first childbirth increased from 25 to almost 33 years of age over the 1985-2018 period. Postponement contributes to having fewer children, and in some cases to not having any children at all. The vast majority of Korean mothers have one or two children. In 2017, just over half of the children born were the first born child, over one-third were the second born child, and less than 10% of births were a third child or higher. Childlessness is also on the rise: where 5% of the women born in 1950 remained childless, this percentage has increased to 12% for women born in 1970 (Chapter 5).

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Figure 1.1. Total fertility rates in Korea are the lowest in the OECD
Total fertility rate, OECD and key partner countries, 2017
Figure 1.1. Total fertility rates in Korea are the lowest in the OECD

Note: The total fertility rate is defined as the average number of children born per woman over a lifetime given current age-specific fertility rates and assuming no female mortality during reproductive years.

Source: OECD Family Database, http://www.oecd.org/els/family/database.htm

At the same time as fertility rates dropped, improved wealth and access to health services contributed to rapid gains in life expectancy which, at just over 82 years, is now 2 years above the OECD average (OECD, 2019[3]). In 2015, Korea was still a relatively young country by OECD standards with 5.6 people of working age for each senior citizen, compared to 4.3 across the OECD on average. However, this old-age-support ratio is expected to decline to 1.5 in 2055, which is below the projected OECD average of 2.1 and the second lowest in the OECD (OECD, 2019[3]). The demographic transition in Korea is projected to take place at an exceptionally rapid pace.

Korea’s declining and low birth rates and ongoing population ageing contribute to a changing face of society and family life. In 1995, couples with children constituted about 50% of all Korean households, while single-parent families, couple-without-children households, and multigenerational households2 all accounted for about 10% of the households each (Figure 1.2). Since then, the proportion of single-person households (of both working-age and senior citizens) has almost tripled, while the proportion of single-parent households doubled and the proportion of couples with children fell to 30%. These trends are also related to an increase in divorce rates (from 1.5 in 1995 to 2.1 divorces per 1000 persons in 2018) and, in particular, a sharp decline in marriage rates: from 9.4 marriages per 1000 people in 1995 to 5.9 in 2018 (OECD Family Database, Indicator SF3.1).

In Korea, men and women get married around the same age as across the OECD on average: around 32 for men and 30 for women (OECD Family Database, Indicator SF3.1). However, in other OECD countries, many parents now have children prior to marriage. In Korea, by contrast, the delay in and abstention from marriage has strong implications for birth rates. Many attitudes in Korean society may have shifted over the past decades (Chapter 2), but childbirth outside marriage is still very uncommon: less than 2% of the childbirths were to non-married mothers in 2016, while this was just over 40% across the OECD on average (OECD Family Database, Indicator SF 2.4). Childbirth and marriage remain strongly associated in Korea.

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Figure 1.2. In contrast to couples with children, single-person households are increasingly common in Korea
Distribution of households by household type, Korea, 1995-2017
Figure 1.2. In contrast to couples with children, single-person households are increasingly common in Korea

Source: Statistics Korea 2019, Population census (annual data), http://kosis.kr/statisticsList/statisticsListIndex.do?menuId=M_01_01&vwcd=MT_ZTITLE&parmTabId=M_01_01#SelectStatsBoxDiv.

1.2.1. Changing attitudes across the generations

The traditional Confucian notion of family life involved a patriarchal family system in China, Japan as well as Korea. The patriarchal and hierarchical organisation of family life put women at a severe social and economic disadvantage relative to men (e.g. in terms of son preference and inheritance rights), involved strong kinship bonds, and embedded a deeply entrenched gender division of labour at home (Park, Cho and Han Park, 2013[7]). In the traditional model, the “marriage package” encapsulated various intra-familial roles for women, childbearing, childrearing and taking care of the elderly – with elderly parents often living with their eldest son (Chapter 5).

The importance of the traditional multigenerational family declined rapidly with the economic transformation after the Korean War – from around 30% of households in 1955 to about 10% in 1990 – as children left rural areas to set up their own families in urban centres (Park, Cho and Han Park, 2013[7]). These families were mainly of the “husband-dominated” type where male breadwinners were the norm, and with strong links to the elderly generations, whether co-resident or not. However, the notion of care obligations for elderly relatives is weakening. In 2002, 70% of Koreans felt that the family should take full responsibility for the care of their elderly relatives; by 2018, this had fallen to just over 25%. Over the same period, the share of Koreans who said that families, the government and society hold joint responsibility for elderly care increased from 20 to almost 50% (Statistics Korea, Annual Social Survey, various issues).

The strength of feeling towards the idea of marriage as a necessary life experience varies with age and educational attainment. Data from the Korean Longitudinal Survey of Women and Families suggest that in particular, women who left school after compulsory education (primary and lower secondary) see marriage as a “must do.” This is also the case for women who are aged 50 and over, but this sentiment is shared by less than 40% of women in their twenties (Figure 1.3Figure 1.3).

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Figure 1.3. Young and highly educated Koreans are least likely to consider marriage a “must-do"
Distribution of responses to the statement "marriage is a must-do for everyone", by age group and education level, women, Korea, 2016
Figure 1.3. Young and highly educated Koreans are least likely to consider marriage a “must-do"

Source: Korean Longitudinal Survey of Women and Families (2016).

Young men and women value their life without family commitments, which contributes to the postponement of marriage, but there is also a group of young Koreans – the “Sampo” generation (literally “giving up on three”) – who seem to have given up on dating, marriage and children altogether (Chapter 2). One set of estimates from 2012 suggests that this concerns as many as 40% of 20-year-olds. Gains in opportunities outside of marriage – in the labour market and in wider society – together with the increasing costs of raising children mean that the traditional marriage package has lost its appeal for many young women, especially those with high levels of educational attainment. Korean parents (mothers) need to devote a lot of time to the education of their children, bringing them to private lessons, supervising their homework etc. to help children succeed later in life. This is not easily combined with a full-time career, involving long hours and/or participation in after-work socialising. Thus, there is high pressure on women to leave the labour market once they have children, not only to provide personal care, but also to guide children through the education system.

The rapid and widespread rise in young women’s levels of educational attainment has reinforced preferences for marrying partners of similar educational and/or socio-economic status. However, long working hours and segregated work places make it difficult for young men and women to meet potential partners (Raymo et al., 2015[8]). Another important reason for giving up on marriage lies in young people’s precarious employment conditions, low pay, job insecurity, limited access to social protection, and high housing costs in urban areas such as Seoul.

Attitudes towards gender roles within marital relationships have evolved towards equality, especially among younger Koreans (Chapter 2). Since the 1990s, the number of dual-earner couples has increased, and young people who do get married increasingly consider this a co-operative partnership with both spouses on equal footing (Chapter 2). However, these avowed preferences are often not put into practice. For example, in 2014 over 40% of men agreed that housework should be equally divided among spouses. In reality, however, Korean women spend almost 2.5 hours per day more on unpaid housework than men do (OECD Gender Data Portal). Similarly in 2012, 32% of the Koreans thought that parental leave should be equally shared between mothers and fathers, and only in France, Germany and the Nordic countries is the proportion 40% of above (OECD, 2017[9]). However, the proportion of fathers who take parental leave remains low (see below), as they feel constrained by workplace cultures and fear the economic impact and the long-term career and economic costs of taking leave.

1.2.2. The importance of education

The sustained increase in educational attainment among the Korean population stands out as one of the most remarkable changes (Chapter 2). Almost all men and women aged 25-34 have obtained at least upper secondary education in Korea, which is 7.5 percentage points above those in the 45-54 age group and 13.5 percentage points above the OECD average (OECD, 2018[10]).

In fact, Korea has the highest degree of educational mobility across the OECD (Figure 1.4). As elsewhere, many children with highly educated parents also achieve tertiary educational attainment, but in Korea, 25% of children with low-educated parents also achieved tertiary educational attainment, almost double the OECD average (OECD, 2018[11]). As of 2012, 57% of Koreans aged 26 or over had a higher level of educational attainment than their parents (Figure 1.4). Education is of major importance to Koreans: it is widely regarded as the key to individual progress. Many parents therefore invest in supplementary private education for their children to position their children as well as possible for entrance into the most prestigious universities, which in turn give access to secure and well-paid careers. Korean parents and their children enter a fierce education struggle to get ahead from a very early age that involves daily participation in schools, after-school programmes, and private cramming schools or Hakwons.

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Figure 1.4. Upward educational mobility is more common in Korea than in any other OECD country
Percentage of adults (26 years or older) who report lower, the same or higher educational attainment than/as their parents, OECD countries, latest available year
Figure 1.4. Upward educational mobility is more common in Korea than in any other OECD country

Note: Latest available year refers to 2015 for Chile, Greece, Israel, New Zealand, Slovenia and Turkey and 2012 for remaining countries. Data for Belgium refer to Flanders and for the United Kingdom to England and Northern Ireland.

Source: OECD (2018[12]), Equity in Education: Breaking Down Barriers to Social Mobility, PISA, OECD Publishing, Paris, https://doi.org/10.1787/9789264073234-en.

Korean children spend a considerable amount of time in school or studying. The regular school day may not be long in Korea (about 5 to 7 hours per day for primary and lower secondary school students, increasing with age), but 82.5% of primary school students and 69.6% of lower secondary school students participate in private education after their regular school day. Primary school students spend about 5 hours per day on private education and associated homework. Korean teenagers spend more time studying than teenagers in other OECD countries, and study hours can last until 11-12 p.m. at night, even though local governments set limits on Hakwon opening hours, e.g. in Seoul at 10 p.m. (Chapter 4). Korea often performs particularly well on measures of children’s well-being in education and at school in terms of bullying or belonging at school. However, Korean teenagers have little time to engage in part-time jobs, physical exercise, talking to parents and even in “internet time,” they fall behind the OECD average. Korean children are time-poor (OECD Child Well-being Portal).

The fierce competition during the school years also means that parents – and mothers in particular – face social pressure to ensure that children do well at school. Korean children face relatively high levels of “helicopter parenting” as parents wish to exercise control to ensure their children meet their high educational expectations. The high expectations increase the risk of young adults experiencing symptoms of depression and reduce college students’ perception of control over their own life (Chapter 4).

Furthermore, the competitive education environment and the development of the private education market have major financial implications for Korean families. Since 1982, the proportion of monthly household consumption spending on private education (including tertiary education) increased from 1% to 7% (Chapter 4). Hence, it is no surprise that about one-third of Korean couples refer to education costs as one reason for not having additional children (Chapter 5).

1.2.3. Employment conditions

Overall, in 2018 employment rates in Korea (67%) were just below the OECD average (69%), as male employment rates are at the OECD average and female employment rates are below it (OECD Employment Database). At the same time, working hours are the second longest across the OECD, which contributes to the overall low labour productivity (Chapter 3). Furthermore, at 85%, Korea has the highest employment share in Small and Medium-sized Enterprises (SMEs, defined as firms with up to 250 workers) and, at 25%, the self-employment rate in Korea is the fourth highest in the OECD.

Overall, two-thirds of employees are in regular employment, and one-third are non-regular employees, including those who work part-time and/or on a contract of fixed duration. Furthermore, almost 30% of Korean employees do not have access to social protection benefits, as informality is pervasive in the Korean labour market (OECD, 2019[13]). The prevalence of non-regular employment conditions and employment in SMEs and self-employment contribute to Korea having the second highest share of low-wage workers in the OECD: 20% of full-time workers earn less than two-thirds of median earnings (OECD, 2018[6]). The prevalence of low pay and self-employment, limited cash and fiscal support for families (see below), and the increase in the number of single-parent households, all contribute to the relatively high child poverty rate (Figure 1.6). As many elderly Koreans have to get by with very low incomes, the poverty rate for the overall population is even higher.

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Figure 1.5. Korea’s employment rate is just below the OECD average, but Koreans work long hours
Figure 1.5. Korea’s employment rate is just below the OECD average, but Koreans work long hours

Note: Panel B: Data for Turkey refer to 2015.

Source: OECD Employment Database, http://www.oecd.org/employment/emp/onlineoecdemploymentdatabase.htm.

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Figure 1.6. Child poverty is above the OECD average
Relative income poverty rate, for the total population and for children (0- to 17-year-olds), 2016 or latest
Figure 1.6. Child poverty is above the OECD average

Note: Data are based on equivalised household disposable income, i.e. income after taxes and transfers adjusted for household size. The poverty threshold is set at 50% of median disposable income in each country. Data for China and India refer to 2011, for Brazil to 2013, for Hungary and New Zealand to 2014, and for Chile, Denmark, Iceland, Ireland, Japan, Switzerland, Turkey and South Africa to 2015.

Source: OECD Income Distribution Database, https://www.oecd.org/social/income-distribution-database.htm.

Despite the widespread and rapid increase in educational attainment, the labour market position of many young people remains precarious. At 43% in 2018, the youth (15- to 29-year-old) employment rate was well below the OECD average (54%) and, in 2017, the share of youth who were neither employed nor engaged in formal education or training (NEETs) was considerably higher than the OECD average: 18.4% and 13.4% respectively (OECD, 2019[4]). The NEET rate is particularly high among college or university graduates, in contrast with many OECD countries, where low-educated youth are much more likely to be NEET.

Despite increases in female employment – by 7 percentage points since 2000 to 57% in 2018 – the Korea gender employment gap (19 percentage points) is well above the OECD average (11 percentage points). The gender pay gap for full-time employees in Korea is the highest in the OECD, at 35% compared to an OECD average of 14% (OECD Gender Data Portal). The large pay gap is related to the relative wide earnings distribution and the fact that women are over-represented among relatively low-paid, non-regular employees – more than 30% of female employees work on a non-regular employment contract (Chapter 3).

The employment barriers that youth and women face contribute to curtailing earnings mobility and in particular occupational mobility (OECD, 2018[11]). Labour market dualism in Korea restricts labour market mobility, and children frequently end up in similar jobs to their parents. For example, 40% of children of manual workers become manual workers themselves (OECD, 2018[11]). Labour market dualism thus holds back social mobility: despite strong educational mobility, it takes five generations for a child of a low-income family to reach the average income in Korea, compared to 4.5 generations across the OECD on average (OECD, 2018[11]).

The long working hours culture (Figure 1.5, Panel B), often in conjunction with long commutes, especially around Seoul, and mixed with the “socialising with colleagues” culture after working hours, complicates the challenge to reconcile work and family commitments for working parents. Having children and a career is difficult to combine; many women – rather than men – feel they have to choose between the two. Highly-educated women in particular postpone having children in view of the large opportunity cost. The increase in childlessness suggests there is an increasing number of women, who do not think that work and family life are compatible. Across the OECD on average, the choice between work and children is less stark. Because of the widespread use of maternity and parental leaves by mothers, female employment rates across the OECD on average no longer fall during the childbearing years (Figure 1.7). By contrast, female employment patterns in Korea continue to reflect the “M-curve” patterns that involves a marked drop in employment during the childbearing years. Traditionally, women in Korea were expected to withdraw from employment when children were born, if not upon marriage. Some workplace cultures may still expect women to withdraw from the labour force upon childbirth, but the use of paid leave benefits by new mothers is increasing (Chapter 3). However, the M-curve pattern remains, also because many women in non-regular employment do not have access to maternity and parental leave benefits (Chapter 3).

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Figure 1.7. Motherhood has a strong effect on women's employment in Korea
Employment rates by sex and five-year age group, Korea and average across OECD countries, 2018
Figure 1.7. Motherhood has a strong effect on women's employment in Korea

Notes: “OECD countries” refers to the weighted average across all OECD member countries.

Source: OECD Employment Database, http://www.oecd.org/employment/emp/onlineoecdemploymentdatabase.htm.

Furthermore, women who have taken a few years out of the labour force to care for young children, find the conditions for their return to the labour market unattractive (Chapter 3). In general, regular employment opportunities are hard to find for the “mother returners” who are often offered only lowly paid non-regular jobs. Bearing in mind that young women nowadays have achieved a higher level of educational attainment this is a rather wasteful use of investment in human capital. Moreover, in view of rapid population ageing, and the projected decline in labour supply, it seems imperative for Korean policy to extend opportunities to reconcile work and care commitments for all (prospective) parents. Indeed, OECD projections suggest that expected declines in the size of the Korean labour force over the next couple of decades could be more than offset by boosting women’s labour force participation and fully closing the gender participation gap by the year 2040 (Chapter 2 and (OECD, 2018[14])). OECD (2019[15]) discusses the question of whether labour migration policy is effective in meeting current and future labour market needs in detail. The influence on fertility trends

Labour market duality generates a high level of competition across young people to get into the best universities, which at a later stage leads to access to stable jobs and good career opportunities. However, a large part of the working age population experiences job insecurity, low wages and limited access to social protection. Based on data from the “Korean Labor & Income Panel Study”, Chapter 5 shows that working women are more likely to become mothers (and more likely to become mothers quickly) when they hold a regular contract, while women in non-regular employment with limited job security are less likely to move into motherhood. However, once women in non-regular employment have a child, they are more likely to have a second child than regular workers, probably because their labour market opportunity costs are relatively low. In addition, public sector employees with high job security are significantly more likely to have a first and a second child than those working in the private sector (Chapter 5).

Job insecurity and earnings issues also feed into challenges around finding adequate housing at affordable prices, especially in Seoul. Chapter 5 shows that homeowners and Jeonse tenants (tenants who rent by paying a lump sum of often 50% or more of the market value of the dwelling3) are more likely to have children than those who pay a monthly rent – a housing status that is associated with a lack of financial resources. More generally, household spending on housing, education and to a lesser extent health exert a negative effect on intentions to have (more) children. Data from the 2017 Survey on Residential Conditions (Chapter 5) suggest that the most important factors when considering having children were housing (31.2%) and care and education expenses (30.6%).

In all, there are tensions between modern attitudes, traditional family expectations and prevailing social and workplace practices, at the same time as issues around job-insecurity, low pay, housing and education costs and all these affect the timing and willingness of young people to marry and have children. In particular for women with high levels of educational attainment, the lure of greater employment opportunities and increased opportunity costs of withdrawing from the labour force has limited the attractiveness of the traditional “marriage package“, while financial concerns have affected the ability of men to fulfil the traditional provider role (especially for men with lower levels of education).

copy the linklink copied!1.3. A dynamic policy response

Welfare states in OECD countries developed over many years. Back in 1960, public social expenditure ranged from 5-12.5 of GDP, rising to between 18.5 and 32% of GDP in (descending order) by 2018 in France, Sweden, Japan, the United States, New Zealand and Australia with an OECD average at just over 20% (Figure 1.8). Public social spending across the OECD has ratcheted up with crises in the early 1970s, 1980s, the early 1990s, and the Great Recession in 2007/8, as it did with the Asian financial crisis in 1997/8 in Korea. As a result, spending increased on unemployment compensation, social assistance and active labour market policies while GDP declined (the denominator in the spending-to-GDP ratios). In addition, population ageing in OECD countries is driving up social spending through increased health and pension expenditures. In Korea, with a much younger population and a less mature welfare state (the pension system has yet to mature), public social spending amounted to just over 10% in 2018, just like in many western European OECD countries back in the mid-1960s. The government projects that under the current framework, public social spending will reach 25.8% of GDP by 2060 (OECD, 2018[6]).

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Figure 1.8. Korea is a young welfare state
Trends in public social protection spending as a percent of GDP, 1960-2018
Figure 1.8. Korea is a young welfare state

Note: Data concern gross spending items and do not account for the direct and indirect taxation of social benefits and/or the value of tax breaks with a social purpose.

Source: OECD Social Expenditure database www.oecd.org/social/expenditure.htm.

As in other OECD countries, public spending on pensions (3% of GDP) and Health (4% of GDP) are the largest public social expenditure items (OECD Social Expenditure Database). However, in Korea family spending constitutes the third largest social spending area at close to 1.5% of GDP (Figure 1.9, Panel A). This is related to the tenfold increase in public investment in early childhood education and care services (ECEC) to one per cent of GDP since the turn of the millennium (Figure 1.9, Panel B). Since the beginning of the 2000s, Korea has developed a comprehensive system of public and private formal day-care and kindergarten support for young children and their parents with enrolment rates in 2015/16 on par with the Nordic countries.

This dramatic expansion of family policy and the ensuing dedication to build a comprehensive ECEC system within in a relative short period stems from the widespread concern around persistently low fertility. Across OECD countries, family policy is multifaceted and involves a range of interdependent objectives (Adema, 2012[16]) (Thévenon, 2011[17]). These include helping parents reconcile work and family responsibilities; mobilising female labour supply and promoting gender equality to foster economic growth (Chapter 2); combating child and family poverty (Figure 1.6); promoting child development and enhancing child wellbeing (Chapter 4); and, promoting conditions that help adults have the number of children they desire at the time of their choosing (Chapter 5). The importance of each of these objectives in the family policy mix varies across countries and over time. In Korea, the overriding goal is to help parents have more children at the time of their choice. The rapid development of ECEC services should be seen in this context; it lies at the centre of Korea’s series of five-year multifaceted policy initiatives designed to address low fertility and issues relating to an ageing society (Box 1.1).

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Figure 1.9. Although overall public family spending remains low in Korea, public spending on ECEC is now well above the OECD average
Figure 1.9. Although overall public family spending remains low in Korea, public spending on ECEC is now well above the OECD average

Notes: Panel A: Public spending accounted for here concerns public support that is exclusively for families (e.g. child payments and allowances, parental leave benefits and childcare support) only. Spending in other social policy areas such as health and housing support also assists families, but not exclusively, and is not included here.

Panel B: In some countries, local governments play a key role in financing and providing childcare services. Such spending is comprehensively recorded in Nordic countries, but in some other (often federal) countries, local spending may not be fully captured.

1. Data for Australia, Chile, Israel, Korea, Mexico, New Zealand, Turkey, and the United States refer to 2016. Data for Poland refer to 2014. Data for all other countries refer to 2015.

Source: OECD Family Database, http://www.oecd.org/els/family/database.htm.

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Box 1.1. Policy Plans on Low Fertility and an Ageing Society in Korea

Since the mid-2000s, Korea has put in place a range of broad policy initiatives to counter the decline in birth rates. Three successive plans have been adopted since 2006 and a fourth is in the pipeline:

  • The first Basic Plan on Low Fertility and Ageing Society covering the 2006-2010 period, introduced measures to facilitate the reconciliation of work and family life, such as financial support for childcare for low-income families or the strengthening the employees' rights for maternity and parental leave. Other measures included (financial) assistance with infertility treatment and medical assistance for pregnant women.

  • The second Basic Plan covered the period from 2011 to 2015 and included, in particular, the introduction of free childcare services for all families regardless of their income level.

  • The third Basic Plan adopted in 2016 for the period up to 2020, aims to improve the standard of living of families through measures towards housing and education costs and the 2018 implementation of the third Basic plan introduced a child allowance for most children aged 0 to 5 years in September 2018. Other measures included labour market integration supports and the development of an after-school programme.

At the end of 2018, the Korean government announced the ‘low fertility and ageing society policy roadmap’ for the period up to 2022, and the fourth basic plan that will cover the 2021-2025 period is currently (2019) being discussed. This roadmap embodies Korea’s paradigm shift in population policy towards improving the quality of life and a more inclusive society that embraces diversity in socio-economic groupings, gender, and across generations (Presidential Committee on Ageing Society and Population Policy, 2018[18]). In particular, the roadmap focuses on gender equality at the workplace and give parents more time in the private sphere. It involved increasing payment rates to encourage fathers’ use of parental leave: in 2016, the daddy month was extended to three months, and from January 2019, the payment rate was increased to 100% of ordinary earnings up to a ceiling of KRW 2 500 000 (USD 2 273)4 per month. The roadmap also introduced fiscal subsidies to employers to put towards the wage costs of employees with children up to age 8, who are allowed to work fewer hours; and requires companies (with 300 employees and/or assets worth KWR 5 trillion – about USD 4.6  billion) to report on workplace gender gaps such as pay, employment and career progression. In the private sphere, mothers will be able to choose to give their baby their surname, and birth and family certificates will no longer hold information on whether childbirth was outside marriage. Support for assisted reproduction treatments was also made available to single women and unmarried couples.

copy the linklink copied!1.4. Towards a continuum of support policies for families throughout childhood

1.4.1. Leave to care for young children

Most OECD countries have long provided paid leave for use directly around childbirth, especially for mothers. Today, all OECD countries except the United States have national schemes that offer mothers a statutory right to paid maternity leave right around the birth (Figure 1.10, Panel A), usually for somewhere between 15 to 20 weeks. An increasing number of countries also offer paid paternity leave – short but usually well-paid periods of leave for fathers to be used within the first few months of a baby's arrival. Paternity leave often lasts for around one or two weeks, although in some OECD countries (e.g. Greece and Italy) they last for no more than just a few days (Figure 1.10, Panel B). In addition, many countries have paid parental leave arrangements that provide paid leave periods for about one year across the OECD on average. Often the paid leave entitlement is “shareable” among parents, which often leads to mothers rather than fathers using the leave, if only to limit the loss of household income during leave as maternal earnings are frequently lower than those of their partners. For that reason, countries have introduced specific fathers’ entitlements within parental leave systems that are not transferable or that award bonus months if fathers use leave. In terms of duration, the Japanese and Korean paid parental leave systems are the most generous, as they provide one year of non-transferable leave for fathers. Portugal has made the use of parental leave by fathers mandatory: Portuguese fathers are entitled to 25 working days of ‘fathers’-only’ paid parental leave, of which they are obliged to use 15 days within the first month after birth.

In Korea, women are entitled to 90 days of maternity leave, of which 60 days are paid up to 100% of past earnings, and the remaining 30 days at 100% of earnings up to a ceiling of KRW 1 800 000 (USD 1 636). However, the Korean system stands out in international comparison by allowing employed mothers and fathers insured with the Employment Insurance Fund to take up to 12 months of paid parental leave each, and the entitlement can be taken until a child’s eighth birthday (with reforms laid out in the First Basic Plan on Low Fertility and an Ageing Society – see Box 1.1). Men can enjoy three “Daddy months” in addition, during which payment rates are 100% up to a maximum of KRW 2 500 000 (USD 2 273) per month, which is equivalent to about 61% of (2019) average earnings for a full-time worker (Chapter 3).

Despite the lengthy entitlements offered to parents, Korea’s paid leave programmes are generally not well used, which helps to explain the limited amount of cash spending on family benefits in Korea (Figure 1.9, Panel A) . For example, of children born in 2017, only about 23% had mothers received maternity leave benefits from the national Employment Insurance Fund (Statistics Korea, 2018[19]), and in 2018, almost 100 000 parents (of which 81, 537 mothers and 17 662 fathers) claimed the parental leave benefit – roughly just over 30 claimants per 100 live births (Statistics Korea, 2018[19]). This compares poorly to some other OECD countries. For example, in Germany in 2016, there were roughly 94 mothers and 35 fathers claiming parental leave benefits for every 100 live births.

Paid leave around childbirth is an important policy tool in the group of measures that help parents combine work and family commitments throughout the early years. Unfortunately, however, the system is not as effective as it might be in Korea as less than a quarter of new-born children’s parents make use of it. There are different reasons for the limited use of parental leave entitlements, including:

  • Until the 1 July 2019 reform, one-third of female employees were not covered by the employment insurance fund. As the Employment Insurance Act does not apply to employees working for less than 60 hours per month, domestic workers and workers in SMEs in the agriculture, construction, forestry, fishery, and hunting sectors with four or less employees, these workers cannot receive maternity leave benefits from the Employment Insurance Fund. The reform covers these workers with income support up to KRW 1 500 000 (USD 1364) for 3 months. Government officials and public and private school teachers are covered by separate occupational arrangements that in terms of payments rates are the same as for employment insurance (EI), but that also provide two years of unpaid leave.

  • Relatively tight criteria for eligibility for employment-protected leave: until the reform in 2018, employees had to work for an employer for the preceding 12 months, which meant that many workers (especially non-regular workers did not qualify). The reform reduced the qualifying period to 6 months, which is likely to increase take-up in future.

  • To take paid parental leave, Korean employees must have been insured for at least 180 days prior to talking leave and take at least 30 days leave consecutively – which is likely to reduce the uptake among fathers. Self-employed workers cannot access paid parental leave.

  • Overall, parental leave payment rates are not high in international comparison. While the first 3 months of parental leave are paid at 80% of previous earnings – and 100% of previous earnings, for the second parent to take leave – the remainder is paid at just 50%. After accounting for payment ceilings, the average payment rate for a parent on (2019) average full-time earnings (the Average Wage (AW), Chapter 2) would be about 31% of previous earnings, rising to 37% for the second parent to take leave (Chapter 3). Cultural factors may contribute to young mothers withdrawing from the labour force rather than taking leave, while a significant share of women prefer not to take the leave in order to avoid penalising their co-workers, as companies often do not fill temporary vacancies (OECD, 2018[6]).In addition, men are reluctant to take leave as they fear the career repercussions of doing so (Chapter 3).

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Figure 1.10. Paid leave entitlements in Korea are long compared to many other OECD countries, especially for fathers
Duration of paid maternity leave and paid parental leave available to mothers and duration of paid paternity leave and paid parental leave reserved for fathers, 2018
Figure 1.10. Paid leave entitlements in Korea are long compared to many other OECD countries, especially for fathers

Note: Data refer to paid leave entitlements in place as of April 2018 and do not reflect entitlements introduced or amended after April 2018. Data reflect statutory entitlements provided at the national or federal level only. They do not include regional variations or additional/alternative entitlements provided by states/provinces or local governments (e.g. Quebec in Canada, or California in the United States), or any employer-provided benefits that are paid beyond the statutory minimum duration. Payment rates during paid leave differ across countries. Data refer to statutory entitlements only and do not reflect the actual use of these entitlements, which may be influenced by cultural and societal norms and the preferences of parents. Periods of paid parental leave labelled “mother or first parent only” and “father or other parent only” refer to individual non-transferable entitlements, “mummy and daddy quotas” or periods of an overall leave entitlement that can be used only by one parent and cannot be transferred to the other parent, and any weeks of shareable leave that must be taken by one or both parents in order for the family to qualify for “bonus” weeks of parental leave.

a. Data for France refer to the entitlement for a family with only one child. Families with two or more children can receive paid parental leave for a longer period.

Source: OECD Family Database, Indicator PF2.1: www.oecd.org/social/family/database.htm.

1.4.2. ECEC-policies

The rapid development of the Korean ECEC system involves a comprehensive range of services for children under school age. There are three main types of ECEC supports: centre-based day-care, kindergarten, and childminding services at home. Support for centre-based day-care services is available to the parents of all children aged 0-5, subsidised (all-day) home-based childminding services are available for children aged between 3 months and 3 years old, and support for kindergarten is available to all children aged 3 to 5 (Chapter 4). Places in publicly supported facilities are heavily subsidised by the government, and generous cash benefits are available to parents with children in centre-based day-care and kindergarten. As a result, Korean has some of the lowest typical out-of-pocket childcare costs in the OECD (Chapter 4). Parents who do not use any of the three main types of ECEC supports can access a home care allowance that provides financial support towards full-time parental care (see below).

In contrast to the leave system, public investment in ECEC has led to widespread use. In 2016, just over half of the 0- to 2-year-olds and 93% of 3- to 5-year-olds in Korea were enrolled in ECEC services (Figure 4.6), and these compare well with OECD averages (33.2% (0-2) and 86.3% (3-5), respectively). Average daily participation of almost 7 hours per day for 5 days per week (in Sweden it is 30 hours per week), further illustrates the comprehensiveness of the Korean ECEC system.

Having developed a childcare sector quickly with the help of private ECEC providers – three quarters of the childcare centres are privately run – policy is increasingly turning to quality issues. The Korean authorities introduced the nationwide Nuri curriculum at kindergarten and day-care centres for children aged 5 in 2012 and children aged 3-4 in 2013, with the aim of improving standards, and since June 2019 accreditation is mandatory for centre-based services. The accreditation process considers issues around the care environment, management, childcare programmes, interaction with children, teaching methods, health, nutrition, and safety. Furthermore, there is also a drive towards bringing private centres into the public sphere, as Korean parents often prefer using public centres as they perceive them to be of higher quality. There is an assessment process before childcare centres can obtain the label “Childcare Facility of Public Standard,” and this process uses more stringent criteria than the mandatory assessments introduced earlier in 2019. As for kindergarten, local education offices (supervised by the Ministry of Education) assess the quality of all the kindergartens in their jurisdiction once every three years (see Chapter 4 for more detail).

1.4.3. Out-of-school-hours (OSH) services

The regular school-day increases with age in Korea, but it is particularly short for the youngest students in primary education who are in school from 9 a.m. until 1 p.m. (Chapter 4). The Korean Ministry of Education provides “after-school education” services (until 5 p.m.) that are available in almost all schools from primary school right through to upper-secondary school. The programme aims to supplement the formal education curriculum, improve educational attainment, develop aptitude through art, music and sports activities, and reduce the burden of private education costs to households. There are also “after-school childcare” services mainly for students in the first and second years of primary school, which are sometimes open beyond 5 p.m. The relatively short hours in primary education and the provision of services at subsidised and affordable fees (Chapter 4), contribute to the high participation rate: in 2016, 65.9% of all primary school students attended these after education classes. Denmark and Sweden are the only other OECD countries where over 60% of children aged 6 to 11 go to centre-based OSH-care services during a typical week (Figure 1.11).

However, in view of the long working hours and private education commitments, just over one-third of primary school children spend some time alone at home or elsewhere, after school hours. To avoid such gaps and improve family service delivery more generally, the government developed community-based “all-day care framework” in a whole-of-government approach, involving the Ministries of Education, Health and Welfare, the Interior, Gender Equality and Family as well as local governments and local education offices. This community-based care service network will provide childcare services using school and community facilities (e.g., town halls, local libraries, and local social services) to link and expand current OSH-service programmes. Each local government is encouraged to develop its own type of community-based services, including different mixes of services, and to make use of local strengths. For instance, “All Together Care Centres”, which started with seventeen pilot programmes in 2017, are providing childcare services including temporary and urgent care, transport to and from schools, help with schoolwork, and offer meals, and are projected to have about 1 800 such centres across the country by 2022. Coverage of the “after-school childcare classes” is scheduled to be extended to all primary schools students in the future. In 2018, about 13.4% of primary school students attended after-school childcare services and community childcare centres.

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Figure 1.11. Participation in out-of-school-hours services is highest in Korea, Denmark and Sweden
Proportion of 6- to 11-year-olds using centre-based out-of-school-hours services, 2016
Figure 1.11. Participation in out-of-school-hours services is highest in Korea, Denmark and Sweden

Note: Data for the United States refer to 2011, for Iceland and Switzerland to 2014, and for Australia to 2017. Data for Australia refer to children aged 6 to 12, for Japan to children aged 7 to 11, and for the United States to children aged 5 to 11. Data for Korea refer to children attending primary school. Data generally reflect the proportion of children who use centre-based out-of-school-hours care services for at least one hour during a usual week, cover the use of services offered before and/or after school hours only, and do not cover 'school-going' children who use centre-based care services only during school holidays or only on days when schools are closed. Exact definitions differ across countries; see OECD Family Database (http://www.oecd.org/els/family/database.htm) Indicator PF4.3 for more detail. Data for Korea refer to primary school students attending after school education classes only, and do not cover children attending other types of out-of-school-hours services. As a result, they likely under-estimate the actual share of children using OSH services.

Source: OECD Family Database, Indicator PF 4.3, http://www.oecd.org/els/family/database.htm, and Korean Ministry of Education (2019[20]), Statistics on After-School Education, https://moe.go.kr/boardCnts/view.do?boardID=316&boardSeq=76304&lev=0&searchType=null&statusYN=W&page=1&s=moe&m=0302&opType=N.

1.4.4. Child benefit, home care allowance and financial incentives to work

Until 2018, Korea was one of the few OECD countries without some kind of national child allowance cash transfer scheme that help families with the costs of raising children and improve their standard of living. Initially, payments were income-tested, but as almost all children with the given age range were covered, it made little sense to maintain it. In 2019, eligibility for the child allowance was expanded to all children aged 0-6. With payment rates close to 2-3% of average earnings, support levels are similar to those in, for example, Finland, Sweden and the United Kingdom, but in these countries payments continue until children become adults.

While developing an extensive formal childcare system, Korea also instituted a home care allowance for parents who care for their young children (0-5) at home, and who do not use childcare, kindergarten and full-time childminding services. Since 2013, the allowance is no longer income-tested and potentially covers all 0-5 year-olds, but use tails off sharply among 3-5 year olds (Chapter 4). Payment rates vary with age: they are highest for those not yet one year of age at 6.8% of the average wage. Parents of very young children (including those on maternity/parental leave) often claim the home care allowance: in 2018, almost 600 000 parents with children aged 0-2 (about 50% of this age group) claimed the home care allowance. The remaining half of children in this age group participated in ECEC.

Payment rates of the different forms of financial support for families with young children are not high (Chapter 2). The popularity of the home care allowance is related to preferences to care at home for very young children, rather than seen as a response to strong financial incentives to stay at home.

copy the linklink copied!1.5. Pathways for policy reform towards a rejuvenated Korea

There are tensions in Korea between modern attitudes, traditional family expectations and prevailing social and workplace practices, and at the same time, issues around job-insecurity, low pay, and housing and education costs. All these factors affect the timing and willingness of young people to marry and have children. To stop the fall in birth rates or better still, to turn trends around towards more sustainable, long-term patterns; policy has to better help (prospective) parents feel secure enough about having children. Korean family policy is already moving in that direction. An extensive set of measures has been put in place since the early 2000s, including comparatively generous parental leave entitlements and the extremely rapid development of a wide range of ECEC services. However, there are still some gaps to fill, especially in terms of access to leave, ECEC quality, and OSH-care capacity. Even so, there is an increasing realisation that public policy change in itself cannot be enough; cultural change is also needed, particularly in workplaces.

1.5.1. Reducing labour market dualism and its impact

Easing the labour market transition of youth

Korea’s labour market is highly segmented, and this segmentation is one of the drivers of persistently low fertility. It generates a high level of competition across youth to get access to stable jobs and good career opportunities, and leads to a large group of workers facing low wages, high levels of job insecurity and low levels of social protection. This is hardly compatible with starting a family. For this reason, many couples postpone the birth of their first child until after they have gained professional experience and achieved a minimum of job stability; being in stable employment for more than 1 year is one factor that influences the probability of starting a family (Chapter 5).

Policies to ease the transition to adult life by helping young people have stable jobs are crucial to enable them to make birth plans. Young adults often need about one year to get a first job upon graduation, often in an SME, and it frequently takes around 2-3 years before they get into stable employment in larger companies. OECD (2019[4]), elaborates on different measures that are needed to help youth have a good start in the labour market, including:

  • Addressing labour market duality by easing employment protection legislation, reforming large business groups and enhancing dynamism in small firms, and support companies in altering their recruitment practices by providing training in competency-based hiring and introducing intermediary matching services for small and medium-sized enterprises.

  • Improving the school to work transition by enhancing employment supports and improving the effectiveness of career guidance and counselling, and ensuring quality improvements in secondary vocational education, including through more and deeper connections with industry. Extend the coverage of apprenticeships among companies and youth and reduce their cost for employers.

  • Extending coverage of social protection among young people, including a more effective enforcement of social insurance legislation, widening the coverage of social protection among non-regular jobs, monitoring access to Earned Income Tax Credits among young workers and easing access to the Basic Livelihood Security Programme by abolishing the strict rules on family support obligations (Chapter 2). There is a risk that increased access to social benefits may increase the job-search period. Then again, according to government estimates, different support measures, including in-work benefits, should bring the real earnings of youth employed by SMEs closer to those working for large enterprises. This would mitigate the implications of labour market duality, while the increased real incomes for young workers can help provide a more solid basis for starting a family.

Increase the use of paid leave to care for children

The effectiveness of maternity and parental leaves as a family support policy is limited, as large groups of workers do not have access to paid leave around childbirth (see above). Eligibility criteria in the current employment insurance (EI) system to employment-protected maternity and parental leave do not cover the one-third of female employees. The maternity leave reform introduced on 1 July 2019 extended coverage and the qualifying period for parental leave has recently been reduced to six months of continuous employment with the same employer. Even so, access criteria should be eased further and extended to include a greater group of (non-regular) workers as well as self-employed workers (Chapter 3).

One of the barriers to the use of existing leave programmes in Korea is the unsupportive workplace culture. In Sweden, for example, the law guarantees the right to parental leave and an employer who fails to comply faces significant penalties: working parents can take their cases to court if they are subject to unfair treatment (e.g. reduced opportunity for promotion or salary increase). Also, few Swedish employers say they have negative views about their employee’s use of parental leave and employees have high trust in their managers on this subject. For leave policies to become more effective in Korea, it is important to develop a more supportive workplace environment and better enforcement of the law (OECD, 2016[21]). A government initiative linking data on health and employment insurance and investigating firms suspected of not allowing workers to take maternity leave is well worth pursuing and should be strengthened where needed (OECD, 2018[6]).

Higher rates of earnings replacement over the leave period are also crucial to increase leave take-up and reduce socio-economic differences in labour market and fertility outcomes. Chapter 5 shows that income support during leave can have a small positive effect on fertility rates, while the duration of child-related leave has no impact. When payment rates are low, financial incentives to take leave are strongest for low-income families, whereas the opportunity cost of taking leave is then higher. Payment rates of around 55-66% up to a certain threshold seems to be a reasonable model to follow (Adema, Clarke and Frey, 2015[22]) (Chapter 3). A comparison with Sweden, where paid leave is the first and essential building block of the continuum of supports for families throughout childhood, may be illustrative. In Sweden, women are entitled to just under 55 weeks of leave at an average replacement rate of 62% of the average wage; when taking both maternity and parental leave, after accounting for payment ceilings, Korean mothers can be on leave for nearly 65 weeks in total at an average payment rate of just under 40% of previous earnings for an average earner.

The Swedish paid leave system also extends eligibility to paid leave at the same payment rate if an additional child is born or adopted within 30 months of the birth or adoption of the earlier child. This is financially advantageous to parents who would otherwise go back to work after the first child, but who reduce working hours, earnings and subsequently qualify for a lower payment rate during leave. The evidence suggests that this “speed premium” contributed to accelerated births, but its effect on the completed fertility rate and family size in Sweden is unclear (Chapter 5).

Higher payment rates are also essential to get fathers to take paid leave around childbirth and contribute to care provision at home. There is some evidence to suggest that this may affect male behaviour throughout childhood. Greater male participation in unpaid work obviously facilitates female employment participation and fosters gender equality at home and in the workplace. As it is a direct policy lever whereby governments can try to change behaviour in the private sphere towards greater gender equality, about one-third of OECD countries have now introduced paid leave targeted at fathers for at least 2 months (Figure 1.10). In Korea, if the father were to take their entire one year paid leave entitlement, after accounting for payment ceilings, the average payment across the whole leave would work out at around 40% of previous earnings for an average earner (AW). In Iceland this is close to 70%, in Sweden it is 78%, and in Norway it is as high as 94% of previous earnings for an average earner. However, as of 2019, the second parent on parental leave for the same child (usually the father), the first three months of leave are paid at 100% of ordinary wages, up to a ceiling equal to roughly 60% of average full-time earnings. In any case, the effect of more fathers taking leave on fertility will be small, and there is even some evidence for Korea and Spain that there seems to be a negative association between father’s leave and the likelihood of having a second child (Chapter 5).

One way of achieving higher payment rates is giving parents the option to use leave for shorter periods at higher payment rates, while facilitating the use of paid leave on a part-time basis (in combination with regular earnings) is another option to increase take-up that would sustain family incomes. It also promotes an equal sharing of the leave entitlement, which reflects the aspirations expressed by a large part of the Korean population (Chapter 5). German policy reform since the mid-2000s provides an example of leave reform that offers higher payment rates at shorter durations – a 12-month paid leave at 67% of the parents' past earning including a 2-month bonus if both parents take at least two months' leave. The leave can be taken on a part-time basis, in which case the allowance can be paid for 20 to 24 months, and is associated with an increase in fertility among highly educated women in their mid-thirties (Chapter 5).

Enhancing workplace flexibility

The prevailing long hours culture in Korean workplaces does not facilitate the reconciliation in work and family life, and these difficulties are the main reason for not intending to have a child for about 20% of Korean women (Chapter 5). Furthermore, it involves health risks and it contributes to low labour productivity overall, so there is ample reason for reform. However, negotiating employment conditions is the remit of employers and unions, and governments around the world are hesitant to directly intervene in this area. Nevertheless, in recent years, the Korean government has moved to introduce legislation regarding curtailing working hours from a maximum of 68 hours per week to 52, and flexible working practices for parents with young children. However, there is room for improvement in relevant workplace practices, including around issues such as:

  • Expanding opportunities to work part-time on a regular employment contract with associated remuneration being proportional to workers on full-time regular contracts, as is common practice in, for example, the Netherlands (OECD, 2019[23]). This could help reduce the number of working women leaving the labour market around childbirth as well as increase the number of “mother returners.” Also, Chapter 5 shows that in line with different cross-national and Korean studies, an expansion of part-time work opportunities (30 hours per week or less) can help increase fertility. Some countries, e.g. Germany and Sweden, reserve flexible working time entitlements to employees with care responsibilities for young children, but other countries such as the Netherlands or the United Kingdom have opened this possibility to all employees to avoid discrimination against particular groups or employees (Chapter 3).

  • Promoting greater working time flexibility. Encourage companies to develop opportunities to work with flexible starting and finishing times, spread working hours across weeks or months, or use home or teleworking options to help workers balance work and family. The government should encourage companies to put this issue on the agenda of enterprise and sectoral bargaining, and facilitate the sharing of information on best practices in working time flexibility and the implementation of associated changes in work organisation.

  • Strengthening affirmative measures to promote gender equality in employment. Korea has put in place affirmative action plans to monitor companies' progress in achieving gender equality in employment (Chapter 3). Following the example of some countries, pay transparency measures could be introduced to help reduce gender pay inequalities.

  • Tackling discrimination effectively: increase sanctions on employers to improve the financial incentives to comply with non-discriminatory workplace practices; strengthen the labour inspectorate to more effectively enforce anti-discrimination legislation; and make it easier for workers to file complaints about discrimination with labour courts.

1.5.2. Greater investment in family well-being

Public financial support for families through cash transfers, tax breaks and service provisions are important policy tools for strengthening the resources of families and their well-being. On the whole, per capita spending on social protection in Korea is just below half the OECD average in 2015 (Figure 1.12): only the level of per capita spending on ECEC services is significantly above the OECD in Korea. By contrast, the amounts spent on public income support during maternity, paternity and parental leave in Korea are well below the OECD average, reflecting its limited use. Per capita expenditure on housing is also much lower than average, as are the per child expenditures on family cash benefit (though they do not account for the September 2018 reform).

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Figure 1.12. Investment in family benefits per capita is generally below the OECD average except for tax breaks and ECEC
Per capita expenditures on family and social policies, 2015
Figure 1.12. Investment in family benefits per capita is generally below the OECD average except for tax breaks and ECEC

Note: Family benefits include child allowances and credits, childcare support, and single parent payments; income support during leave to care for children are categorised in a separate “parental leave allowances” category. Health expenditures include spending on in- and out-patient care, medical goods, and prevention. Tax breaks for families include tax exemptions (e.g. income from child benefits that is not included in the tax base); child tax allowances (amounts for children that are deducted from gross income and are not included in taxable income), and child tax credits (amounts that are deducted from the tax liability). Spending on early childhood education and care include the direct financing or subsidisation of childcare and early childhood education facilities, plus public childcare support through earmarked payments to parents. Housing expenditures include housing allowances and rent subsidies. Government spending on primary, secondary and tertiary education are expressed per full-time student. For each category, the total of expenditures is divided by the approximated population target: the number of children aged 0 to 17 for tax breaks and family benefits; the number of births for spending on leave; the number of children under age 5 for early childhood education and care services; the unemployed population for unemployment and activation policies; and, the total number of the population for health and housing expenditures.

Source: OECD Social Expenditure Database (www.oecd.org/social/expenditure.htm) and Educational Finance Indicators.

Chapter 5 shows that across the OECD, there is a positive association between fertility rates and per capital level of total social spending, and that the association between fertility rates and per child spending on ECEC services is strongest. Chapter 5 also shows that across OECD countries, fertility rates are not related to the duration of paid leave around childbirth, but are positively associated with increased public spending on paid leave, health and housing.

When starting a family, young people consider housing opportunities in terms of affordability, but also consider the quality of buildings and the local housing environment, including access to good quality childcare services, schools, jobs and commuting opportunities (OECD, 2018[24]). Korea’s policies aim to alleviate the housing cost burden for young people, newlyweds, and multi-child families by: supplying new and maintaining existing public rental housing units; enhancing the coverage of housing allowances; and increasing loans for both rental housing and housing for purchase. Indeed, many young couples do not have the necessary income to buy their first home or to enter the traditional Jeonse rental system (see above). The government now offers low-interest loans for housing deposits under the Jeonse system to young people, and young people under 35 can also borrow at a reduced rate to help with monthly rent. Such policy supports could be extended to cover more young people.

Current per capita spending levels as related to GDP are not high in international comparison (Figure 1.12), which suggest there remains room to invest more in families to help them deal with the cost of raising children. However, the effect of increased investment in family supports on fertility rates is likely to be limited (Chapter 5). Furthermore, the design of such measures has to be considered carefully to enhance their effectiveness (e.g. see the experience with the use of paid leave to care for children) and to avoid adverse and unintended effects. Current payment rates of cash and fiscal supports to Korean families are relative low – and childcare support is relatively high, so that overall financial incentives to work are strong (OECD Tax-Benefit Data Portal). However, there is a risk that increasing income support might reduce labour supply. Korea’s new child allowance is moderate by OECD standards, and eligibility is limited to families with children aged 0-6. Extending eligibility up until children reach adulthood or at least up to the point where they leave compulsory education, would further help Korean families with the costs of raising children, as would expanding the means-tested refundable child care tax credit.

Having rolled out an extensive ECEC system, quality concerns are increasingly coming to the forefront in ECEC policy (OECD, 2019[25]). The pre-primary education “Nuri Curriculum” for ECEC services, was introduced in 2012/13 and mandatory accreditation of childcare centres was introduced in 2019. However, not all centres are of a standard that benefits public ECEC facilities, and there is room for improvement in standardising the curriculum across all centres, enhancing quality standards across more centres and strengthening quality monitoring.

Educational expectations for children – and their associated costs – are likely to play a role in fertility decisions. The school environment is extremely competitive, and the amount of time spent studying affects both child well-being and the household cost of education. Making child education less costly for households, but also less stressful and time consuming is key to improve child and family well-being. To that end, it is important to address the fundamental drivers of demand for expensive private education: i.e. improve the quality of public education, better address the needs of high school students and strengthen vocational education. Greater public spending on education could increase the number of hours in primary education and improve its quality by reducing student-teacher ratios, thereby reducing the need for and time spent on expensive private education. Strengthening vocational education would reduce the over-emphasis on higher education and the need for private tutoring (OECD, 2014[26]). The need for private education would also diminish by reducing the role of the university entrance exam: the College Scholastic Aptitude Test – CSAT. Increasingly, students use “early admissions” processes to enter universities (which give greater weight to broad criteria such as teacher recommendations, service projects, extra-curricular activities and employment experience, other than the CSAT) (Chapter 4). Giving greater weight to these broader criteria within university entrance procedures, would reduce the demand for Hakwon, which include a strong focus on preparing students for the university entrance exam (OECD, 2014[26]).

Care and education policies should focus more on children and adolescents well-being from the early years of life, and pay more attention to child development, personal self-esteem, trust and social skills. To this end, ECEC and afterschool services could make more room for play-based learning and sports and arts education, which are shown to have positive effects on children's cognitive, emotional and social development. This requires having qualified staff and establishing partnerships between various groups of practitioners and stakeholders at the local level. Guidelines to develop best practices could also help further develop high-quality, cost-effective family services. Greater investment in and a better organisation of local services, as in all-together centres, can help improve the delivery of “wrap-around care services”, avoid children being on their own during the day, and improve child and family well-being.

However, there should be no doubt that increased public spending on education will have only a limited positive effect on fertility rates, unless the competitive nature of the education system is changed and parents and children face less pressure to enter the educational race that feeds the private education industry. It is ironic that the persistently low birth rate may well prove to be helpful in this regard: rather than competing to get into universities, the private education industry will start competing to attract students from a shrinking birth cohort. This could reduce the demand for private education in future.

Finally, it is important that the different family policy measures of cash, fiscal and in-kind service supports fit together in a seamless system of continuous supports throughout childhood. Once people get the feeling that having children is compatible with work commitments – as they do in, for example, the Scandinavian countries and France, then they will actually have children. Employers, unions, and society at large all have their role to play in forging an environment wherein young people sense they can successfully pursue their work and family aspirations. Public support for such a work and family society is indispensable, but it also has to be reliable. For family policies to be effective, they have to be trusted. Such trust is gained through the stability and continuity of such policies. The widespread concerns among Korean policy makers on the persistence of low birth rates suggests that a consensus among the political spectrum should be found for years to come to build the stability and continuity that family policy needs to be effective.

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Box 1.2. Family policy recommendations for Korea

The effectiveness of family policy reforms as proposed below is co-determined by the institutional context in which it plays out. For example, without product market reform that reduces the gaps in productivity and wages between Chaebols and SMEs and/or labour market reform that limits the gaps in employment conditions between regular and non-regular workers (OECD, 2018[6]), the suggested reforms below will be rendered less effective than they otherwise could have been.

  • Improve the school to work transition for youth in Korea through a range of measures including: better career counselling, improved secondary vocational education, extended coverage of apprenticeships and greater access to social protection and adequate employment support for youth (see (OECD, 2019[4]), for more detail).

  • Enhance the use of maternity and parental leave as a family support tool by:

    • Introducing options to take leave for shorter periods at higher payment rates and/or use leave on a part-time basis; extending parental leave entitlements to groups of workers hitherto not covered (e.g., employees working less than 600 hours per month, domestic workers and the self-employed). Introduce information and awareness campaigns, among men and employers to promote take-up among fathers.

    • Increase payment rates of income support during leave to stimulate use. Payment rates of around 55-66% up to a certain threshold over a specified period appear to be a reasonable model to follow.

      Consider introducing a “speed premium” in the parental leave system that allows taking leave at the payment rate applicable for the previous child.

  • Improve flexibility in workplace practices, including through:

    • Expanding opportunities to work part-time in regular employment with remuneration and benefit entitlements being proportional to full-time workers.

    • Promoting greater working time flexibility by developing opportunities to work with flexible starting and finishing times, and to spread working hours across weeks or months.

    • Monitoring the effects of the recent introduction of legislation aimed at curtailing the prevalence of long working hours, and introduce reforms as needed in view of this evaluation.

    • Improving enforcement of non-discrimination legislation.

  • Help young people and families with children by extending support (such as low-interest loans) for these groups to buy or rent accommodation through the traditional Jeonse tenure system or by providing support of equivalent value to monthly rentals.

  • Consider extending the eligible age range for the new Korean child allowance to families with children until adulthood or at least up to the age where children leave compulsory education, and/or expanding the child care tax credit.

  • Making child education less costly for households and less stressful and time consuming is key to improve child and family well-being. Measures could include:

    • Greater public spending on education to increase the number of hours in primary education and improve its quality, thus reducing the need to spend time in private education.

    • Give greater weight in university admission processes to broader criteria such as teacher recommendations, service projects, extra-curricular activities and employment experience, thereby reducing the need to use private education to prepare for the College Scholastic Aptitude Test.

    • Strengthening vocational education reduces the need for private tutoring.

  • Roll out greater investment in and a better organisation of local services for families and children through, for example, the extension of “After-school childcare classes” to all primary school children and “all together centres” to improve the delivery of “wraparound out-of-school-hours services.”

It is important that the different family policy measures of cash, fiscal and in-kind service supports fit together in a seamless system of continuous supports throughout childhood. To engender the trust in family policy that is so necessary for it to be effective, it is crucial that family policy is supported across the political spectrum so that its stability and continuity is guaranteed.

References

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[22] Adema, W., C. Clarke and V. Frey (2015), “Paid Parental Leave: Lessons from OECD Countries and Selected U.S. States”, OECD Social, Employment and Migration Working Papers, No. 172, OECD Publishing, Paris, https://dx.doi.org/10.1787/5jrqgvqqb4vb-en.

[20] Korea Ministry of Education (2019), Statistics on After-School Education 2018, https://moe.go.kr/boardCnts/view.do?boardID=316&boardSeq=76304&lev=0&searchType=null&statusYN=W&page=1&s=moe&m=0302&opType=N.

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Notes

← 1. A comprehensive study of work-life balance issues warrants a detailed discussion of all relevant policies, including long-term care policies. However, a detailed assessment of long-term care (and associated social and health care) systems is beyond the scope of this report, which focusses more narrowly on issues around reconciling work and care commitments for families with young children.

← 2. The economic transformation after the Korean War contributed to the declining prevalence of the traditional multigenerational family (from 30% of households in 1955 to 10% in 1990), as children left rural areas to set up their own couple families in urban centres (Park, Cho and Han Park, 2013[7]).

← 3. The Jeonse down-payment is paid back to the tenant at the end of the rental contract in nominal terms, so that the Landlord captures the gains in house price inflation.

← 4. Throughout this report, values in Korean Won (KRW) are converted to United States Dollars (USD) are the 2018 period average of 1 USD = 1100 KRW (OECD, 2019[27]).

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1. Rejuvenating Korea: Policies for a Changing Society