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Korea is a changing society. Over the past 60 years, strong economic development has made Korea the ninth largest economy in the world. Korea’s men and women are among the most highly educated in the world. 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 – the male breadwinner notion – has lost its appeal to many young women, especially those with high levels of educational attainment. Nevertheless, childbirth remains strongly associated with marriage. Thus, the barriers young people face in finding a partner while establishing themselves in the labour market contribute to declining fertility. Indeed, total fertility rates have dropped from six children per woman on average in 1960 to just below one child per woman in 2018. At the same time, greater wealth and better access to health supports have contributed to rapid gains in life expectancy: Korea faces the fastest rate of population ageing across the OECD.

The benefits of economic growth have not been shared evenly in Korea: income inequalities are wider than across the OECD on average and about one in six Koreans live in poverty, among which are many elderly. These income inequalities are related to the limited redistributive power of the Korean tax/benefit system 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 terms contracts, limited earnings growth and restricted access to social protection.

The prevailing long working hours culture in Korea makes it difficult to reconcile work and family life, contributing to female employment rates below the OECD average. Labour market dualism makes it difficult for women to return to regular employment after a period out of the labour force. Since working women are under-represented in regular jobs, Korea has one of the highest gender pay and employment gaps among OECD countries. 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 build stable careers, they hesitate to start a family.

Competition for good school and university places that lead to secure and well-paid careers starts early in Korea. Even before primary school age, 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. Korean parents and their children engage in an educational struggle to get ahead that involves daily participation in schools, after-school programmes, private tutoring schools or Hakwon, as well as homework – children often spend more than 10 hours per day on such activities. The high private education costs are often regarded as a barrier to having (more) children.

The widespread increase in educational attainment and wealth has also 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. For example, with a tenfold increase in public investment since 2000 to one percent of GDP nowadays, Korea has developed a comprehensive system of public and private formal day care and kindergarten. Enrolment rates in 2015/16 were on par with the Nordic countries. Korea is also rolling out a community-based care service network that will provide childcare services using school and community facilities, and link and expand current out-of-school-hours services.

Korea also has a comprehensive system of paid child-related leave, with paid maternity leave for 90 days and one year of paid parental leave for both mothers and fathers. However, the paid parental leave system is only used by about 25% of mothers and 5% of fathers, as until recent reform, many workers had no access to paid leave, and many workplace cultures are still not conducive to mothers and fathers taking leave.

Indeed, change in labour market institutions has been slow. Reducing labour market dualism is key to helping young people and parents enter and thrive in the labour market. Relevant policy measures include: easing employment protection legislation; strengthening vocational education and widening the coverage of apprenticeships; increasing the recruitment of replacement workers and paid leave payment rates to stimulate use of paid child-related leave; monitoring the effectiveness of legislation aimed at capping weekly working hours to 52 hours per week; and introducing pay transparency measures to help reduce gender pay gaps. Strengthening in-work benefits, housing supports (e.g. through low-interest loans) and financial support (e.g. through the child allowance) for families up to the age where children leave compulsory education would boost the real incomes of young people and families and help provide a more solid basis for starting and supporting a family.

Making child education less costly for households but also less stressful and time consuming is key to improving child and family well-being. To that end, it is important to address the fundamental drivers of demand for expensive private education: e.g. through improving the quality of public education and strengthening vocational education.

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 support throughout childhood. Once people gain confidence that having children is compatible with work commitments and with family budgets, then they will actually have children. Employers, unions, and wider society all have their role to play in forging a healthy work and family environment. Public support is indispensable, but it can only be effective if it is trusted. To that end, it is crucial that family policy is supported across the political spectrum in order to guarantee its stability and continuity.

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Executive summary