Firms seek to tackle low birth rate with hefty incentives

South Korean conglomerates are expanding birth incentive programs to help boost the country’s record-low fertility rate amid mixed expectations about their effectiveness.

Underwear maker Ssangbangwool announced Thursday that the company will provide up to 100 million won ($75,000) to employees who are expecting babies.

Under the company's birth incentive scheme, an employee can receive 30 million won for the first child, another 30 million won for the second and 40 million won for the third. The company added it will provide up to 3 million won to employees who need in vitro fertilization.

“A low birth rate is an important task for our society to overcome. The company will take responsibility and put all-out efforts to help the country increase the fertility rate,” an official from Ssangbangwool said.

The announcement comes after construction company Booyoung Group said earlier this month that it would provide employees with 100 million won per birth -- the highest fertility cash incentive offered among local corporations.

Booyoung has delivered a combined 7 billion won to 70 employees who had one child or more since January 2021, the company said.

The government is also supporting companies’ birth incentive programs. Last week, President Yoon Suk Yeol instructed his aides to provide tax benefits and other support measures to encourage companies to launch birth incentive programs.

Despite the joint public-private efforts on birth incentive programs, many workers remain skeptical about whether money alone can make a difference.

“My company has recently decided to raise financial support for employees expecting babies. But, I don't think that money alone can make employees have babies. They don't want to feel guilty about using full parental leave, and policies that can ensure flexible hours are also absent,” Kim, a working mother of a 7-year-old boy, said on condition of anonymity.

Some have raised concerns that the government’s tax benefit can lead to job polarization.

“The recent news involving large companies’ birth incentive programs and the government’s plan to provide tax benefits worry me because I am not eligible for them,” said Lee, a 30-year-old employee working at a small-sized company.

According to the National Tax Service, only 2.3 percent of employees in the country received financial support from their companies’ birth incentive programs.

“Birth incentive programs that companies provide some financial help, but they will not have a great impact on spurring a meaningful increase in the country’s fertility rate as only a few employees can benefit from them," a human sources department worker at a local conglomerate said. "Rather, a birth incentive program may become a great tool for a company to build a positive brand image."

Meanwhile, South Korea's fertility rate -- the number of children that are expected to be born to a woman over her lifetime -- hit a record low of 0.78 in 2022, and the figure for 2023 is expected to dip further.