Analysis of the Characteristics of Childcare Support Fiscal Programs and Estimation of their Financial Demands
Published on 29 November 2019
Published by Economic Cost Estimates Division of the Estimates and Tax Analysis Department
In this report, an analysis is conducted on the characteristics of childcare support fiscal programs, which have recently been expanded, based on raw data provided by the Employment Insurance Database. The analysis was conducted separately for fathers and mothers, based on which the projected fiscal demands over the next 10 years have been forecast. Among childcare support fiscal programs, this analysis focuses on childcare leave allowance and the allowance for reduced working hours during childcare. The criteria for the analysis included the recipients’ age, their children’s age and period of receipt, as well as the rate of return to the workplace after the end of the program.
The analysis revealed that compared to women, men usually go on childcare leave when their children have reached a certain age, and apply for a relatively short period of leave. Also, the reason behind the recent surge in men’s applications for childcare leave is because of the increased participation in childcare by young male employees of large companies in which the number of full-time employees is at least 1,000. In addition, some companies offered a very short period of leave.
The program to reduce working hours for parents involved in childcare has also been widely utilized, with a growing number of men signing up. However, this increase is not as significant as that of male employees of large companies applying for childcare leave. Moreover, participants in the reduced working hours for childcare program exhibited a higher rate of returning to work compared to those applying for childcare leave. This is due to the nature of the program, where those who have a greater reason to maintain their employment status are more likely to choose to apt for reduced working hours.
Based on the analysis, the fiscal demands for major childcare support programs have been estimated. The annual allowance for childcare leave is expected to increase by 4.9% on average, from 1 trillion 138.9 billion won in 2019 to 1 trillion 755.4 billion won in 2028, while the annual allowance for reduced working hours for childcare is expected to increase by 12.7% on average, from 24.2 billion won in 2019 to 70.9 billion won in 2028. The increase rate is higher in terms of the annual allowance for reduced working hours because its applicable period has been extended and the size of each allowance unit has been increased since October 2019.