South Korea to spend $20 billion to boost births

Posted: 4 April 2006

The South Korean government is to spend $20 billion to raise the country's birth rate, the lowest among Organization for Economic Cooperation and Development members, to fuel economic growth, it was reported yesterday.

South Korea's economy has expanded sevenfold in recent years. But after 2010, growth will begin slowing unless the birth rate increases, according to the Korea Development Institute, a state-run research group.

The 'problem' is a result of the government's own policy, says the Korea Economic Institute in Washington. For 40 years, it discouraged families from having more than two children, fearing that population growth would undermine economic prosperity. Abortion was legalised in 1973, and maternity benefits for women having a third child were ended in 1984. The initiative was successful and the number of births dropped to 476,000 last year from 1 million in 1970, National Statistical Office figures show. The low birth rate also resulted in the world's fastest-aging population.

The government's turnaround plan includes $10 billion to pay 80 per cent of kindergarten fees for all children, with additional help for families with three or more children. About $6 billion will be used to build more state-funded day-care centres and $680 million to help infertile couples.

Tax structure The goal plans to increase births to the OECD average of 1.6 children per woman by 2010. The government is considering changes to the tax structure and is encouraging companies to help foster larger families as well.

Korea Exchange, which runs Seoul's stock exchange, is supporting the birth drive by rewarding employees who have a third child. It paid 5 million won (US$1000) to Seo Aaron, a communications manager, when his wife gave birth to a son last month.

Some doubt that such steps will be successful. Women being urged to join the workforce aren't willing to shoulder the double burden of holding a job and raising children, said Park Soomi, 41, a researcher at the Korea Women's Development Institute in Seoul.

"As our society shifted from the farming industry to manufacturing and technology, women left home to work," Park said. Social demands for women have changed."

Source: Edited report from Bloomberg/Push Journal April 3, 2006