The Government Considers Increasing Parental Leave Benefits
The government is currently discussing a plan to elevate the upper limit of parental leave benefits. These benefits, which currently provide up to 1.5 million won per month for individuals on parental leave, may potentially be increased to align with the minimum wage.
In a recent meeting held by the Low Birth Rate and Aging Society Committee, the government deliberated ways to enhance childcare leave benefits as a means to boost the declining birth rate. One of the proposals under consideration involves increasing the childcare leave benefits to match the minimum wage. To facilitate the implementation of this policy, the government is actively seeking methods to augment financial resources, with the aim of implementing this adjustment next year.
In 2022, the minimum monthly wage, calculated based on 209 working hours, stands at 2,010,580 won. Next year, it will rise to 2,060,740 won. If the maximum parental leave benefits are aligned with the minimum wage, the monthly amount received will surpass the current payout by over 500,000 won.
To qualify for childcare leave benefits, individuals must receive more than 30 days of childcare leave, as stipulated in the Employment Insurance Act, and must have contributed to employment insurance for at least 180 days. Eligible participants are entitled to receive 80% of their regular salary during the leave period, with a maximum cap of 1.5 million won and a minimum of 700,000 won, for up to one year.
Parental leave can be taken by pregnant female workers to safeguard their maternity or to care for children under the age of 8 or in the second grade of elementary school. Currently, the leave period extends up to 12 months, but starting next year, it will be extended to 18 months.
Despite these provisions, Korea’s income replacement rate for parental leave benefits lags behind at 44.6% when compared to other OECD member countries. Among 38 member countries with similar systems, Korea ranks 17th in terms of income replacement rate, highlighting the need for improvement.
To address the low utilization rate of parental leave, the government also contemplates expanding the scope of childcare leave. Currently, the parental leave system primarily caters to office workers, as funding is primarily sourced from the Employment Insurance Fund, which is primarily allocated for unemployment benefits. Regrettably, special workers, such as specially employed individuals, are currently unable to avail themselves of childcare leave benefits.
The primary challenge lies in securing the necessary financial resources. As of the end of last year, the reserves of the Employment Insurance Fund totaled 6.3 trillion won. However, excluding the deposits borrowed from the public money management fund, the actual reserves show a deficit of 3.9 trillion won.
In order to explore potential avenues for expanding childcare benefits and find solutions to address the financial shortfall, the Low Birth Rate and Aging Society Committee plans to organize a discussion meeting on the 10th of next month. Measures being considered include establishing a new social insurance program tentatively called parental insurance and expanding investments from the national treasury.
▲ A newborn baby[강원도민일보 자료사진]
The government is considering a plan to raise the upper limit of parental leave benefits, which provide up to 1.5 million earned per month to those on parental leave, to the level of the minimum wage.
According to the Low Birth Rate and Aging Society Committee on the 24th, the government is considering ways to increase the amount of childcare leave benefits in order to increase the birth rate.
First of all, it is considering raising childcare leave benefits to the level of the minimum wage, and the government is looking for ways to raise financial resources so that the policy can be implemented next year.
The minimum monthly wage this year (based on 209 hours) is 2,010,580 won, and next year it will be 2,060,740 won. If the maximum wage increases to the minimum wage, the monthly childcare leave benefit will be more than 500,000 earned more than it is now.
Employees who receive more than 30 days of childcare leave under the Employment Insurance Act (more than 180 days of employment insurance) receive childcare leave benefits of 80% of their regular salary (a maximum of 1.5 million after to win, a minimum of 700,000 won) for up to a year.
Pregnant female workers can take parental leave to protect their maternity, or to raise children under the age of 8 or in the second grade of elementary school. The period is currently up to 12 months, but will be extended to 18 months from next year.
Korea’s income replacement rate for parental leave benefits is 44.6% (OECD ‘Family Database’) in 2022, the 17th lowest among 27 OECD member countries with similar systems among 38 member countries .
Due to the low income replacement rate, the parental leave utilization rate is at rock bottom.
The government is also considering expanding the scope of childcare leave.
The parental leave system is essentially based on office workers, as its main source of funding is the Employment Insurance Fund, which is used for unemployment benefits. Specially employed workers (special workers) are currently unable to receive childcare leave benefits.
The problem is financial resources. At the end of last year, the reserves of the Employment Insurance Fund, which is the source of the money, were 6.3 trillion won, and excluding deposits borrowed from the public money management fund, the actual reserves are in a deficit of 3.9 trillion won .
The Low Birth Rate and Aging Society Committee, which oversees low birth rate policies within the government, plans to hold a discussion meeting on the 10th of next month to look for ways to raise financial resources to expand benefits childcare absence.
Measures to raise financial resources include the establishment of a new social insurance called parental insurance (tentative name) and the expansion of national treasury investment.
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