South Korea firm to give workers $75,000 bonus to have babies, help country

Korean construction giant Booyoung announced the financial incentive as the country is faced with falling birth rates amid rising cost of rearing a child

Booyoung, a South Korean construction group, will give its workers an annual bonus of $75,000 for each child they have as an initiative to start or expand families, according to media reports, in a country tackling a demographic crisis with attention-grabbing measures.

Addressing employees last month, Booyoung founder Lee Joong-keun said that if South Korea's birth rate remains low, the nation could face extinction.

Falling birth rate in South Korea

According to government data, South Korea's total fertility rate dropped from 0.78 in 2022 to 0.72 in 2023 and is projected to decline further to 0.68 this year. This rate falls well below the 2.1 deemed necessary by the Organisation for Economic Co-operation and Development (OECD) to have a stable population.

 

Recent government statistics highlight the deepening demographic crisis in South Korea, with the birth rate hitting a new record low in 2023 despite significant investments in pro-natal policies.

Since 2018, South Korea is the sole OECD member with a fertility rate below 1, with women in the country giving birth for the first time at an average age of 33.6, the highest among OECD nations.

Without a reversal in the low birth rate, projections suggest that South Korea's population could nearly halve by 2100, according to the Institute for Health Metrics and Evaluation.

Why are birth rates falling in South Korea?

However, financial incentives and other efforts have not been sufficient to sway couples, who cite high childcare costs, property prices, job insecurity, and the demanding education system as major obstacles to having larger families.

As per reports, experts have also pointed to factors, such as the challenges faced by working mothers balancing career and household responsibilities, as contributing to the declining birth rate.

Marriage rates in South Korea are declining, largely due to the high cost of living.

Government incentives

The government has invested over 360 trillion won ($270 billion) since 2006 in various programs aimed at encouraging couples to have more children, including financial incentives, childcare services, and support for infertility treatments.

The current administration, under President Yoon Suk Yeol, has prioritised addressing the falling birth rate and has pledged to implement "extraordinary measures" to tackle the issue.

The problem of an ageing population

Economists have highlighted the significant fiscal hurdles confronting South Korea as its government contends with the imperative of supporting its rapidly ageing populace. As indicated by the Korea Institute of Health and Social Affairs, the nation's gross domestic product (GDP) is projected to plummet by 28 per cent in 2050 compared to its 2022 levels, a consequence of the working-age population diminishing by nearly 35 per cent over the ensuing 25 years.

As per reports, the proportion of individuals aged 65 is poised to escalate to 25.5 per cent by 2030 and 46.4 per cent by 2070. According to the OECD, 40.4 per cent of South Koreans aged over 65 currently experience relative poverty, the highest proportion among developed nations. Meanwhile, forecasts suggest that the country's national pension fund will be depleted in slightly over three decades.

A similar story in Japan

These developments follow reports of South Korea's population shrinking for the fourth consecutive year, echoing similar trends in neighbouring Japan, which recently experienced its own record decline in population, births, and marriages.

In Japan, a similar trend persists, with the number of births falling for the eighth consecutive year in 2023, reaching a historic low. Prime Minister Fumio Kishida has warned that the country's low birth rate poses a significant threat to its societal functioning and must be urgently addressed.

According to the health and welfare ministry, Japan recorded 758,631 births in 2023, marking a 5.1 per cent decrease from the preceding year and representing the lowest birth count since records began in 1899.

Additionally, the number of marriages dropped by 5.9 per cent to 489,281 couples, dipping below half a million for the first time in 90 years. This decline in marriages is cited as one of the primary factors contributing to the decreasing birth rate.