7 Mar 2024

Why Some Companies in South Korea Are Giving Huge Financial Incentives to Their Employees?

To encourage young people in the country to start families, a private South Korean company, 'Bo Young,' has introduced a financial incentive of 75 thousand Korean dollars for its employees. 

This initiative comes amid concerning data from the Korean government revealing a historic decline in the country's birth rate. 

South Korea already had one of the lowest birth rates globally, and the current situation is exacerbating the severity of the issue.

Government data from 'Statistics Korea' indicates a decline in the child birth rate, dropping from 0.78 in 2022 to 0.72.

Birth rate refers to average number of children born per woman. A nation needs to have a birth rate of 2.1 so that its population remains stable. Birth rate below 2.1 means the population will start falling. A total fertility rate of 2.1 children per woman generates broad stability of population.

At the political forefront, growing apprehension surrounds Korea's dwindling birth rate, prompting successive governments to address this issue since 2006. Numerous initiatives, including programs promoting child rearing, subsidized housing for newlyweds, and various welfare programs, have been implemented in an effort to reverse the trend. 

Despite the allocation of a substantial $270 billion towards these endeavors, concerns persist about the efficacy of these measures.

National priority

The government has made it a national priority to reverse the trend of declining population.

Similar to many other nations, South Korea also mandates marriage as a prerequisite for parenthood. However, the escalating cost associated with initiating married life has led to a growing trend among the younger generation to opt for not getting married.

According to the estimates of 'Statistics Korea', despite all the government efforts, the birth rate in the country will further decline to 0.65 in 2025. Experts say that the main reason for this is the difficulties faced by women. If they want to work along with having a child, there is a lot of social pressure on them and they have to face a lot of discrimination in the job.

Youths do not want to marry

The number of youths in South Korea who do not want to marry due to economic reasons is increasing. And among those who are married, many couples do not want to have children.

One of the measures taken by the Korean government to encourage the birth of children is that on the birth of every child, the government gives 2250 Korean dollars to the parents in the name of 'baby payment'.

The profound population decline crisis in South Korea is reaching such depths that, if the current trend persists, the workforce in the country will be reduced by half over the next fifty years. Consequently, half of the nation's population will enter retirement age, surpassing the threshold of 65 years.

Private companies have also come forward 

According to experts, now private companies of the country have also come forward to avoid this crisis. Last week, 'Bo Young', a construction company in Seoul, announced that the company will give 75 thousand dollars to a man and a woman working in this company on the birth of a child. The company will pay this amount to its employees for every child born.

This company has paid approximately 53 lakh dollars to its employees for this work since 2021. Lee Jong-kyon, 83-year-old chairman of Bo Young Company, said, "If this rate continues like this, then at some point the country will have to face an existential crisis." The purpose of financial assistance is to help in growing the family without compromising one's career.

Some other companies are also providing financial help to their employees to have a child. Hyundai, the largest car manufacturing company in South Korea, has also announced to give $3750 to its employees on the birth of every child.

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