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Title Analysis of Policy Measures to Address Low Fertility RatesⅡ [Policy Priorities]

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Analysis of Policy Measures to Address Low Fertility RatesⅡ [Policy Priorities]
December 30, 2016
Kim Sangwoo

    This report analyzes the priority of policy measures taken to tackle low fertility rates and the aging population by reviewing the government's assessment of its first and second five-year Basic Plans to Address Low Fertility Rate and the Aging Population through meta-evaluation, an analytic hierarchy process (AHP) conducted on experts, and a survey of local government officials in charge of the demographic issues, and it examines the need for additional funding and possible measures to secure such extra funding.
    According to the AHP conducted on experts, the policy measures are prioritized, in terms of urgency, effectiveness, efficiency, and applicability, as follows: work-family balance (0.279), improved daycare (0.268), improved environment for marriage (0.159), better education environment (0.149), and better environment for child birth (0.144). Also, their detailed measures are prioritized as follows: reliable daycare services and early childhood education; improved workplace culture and practices for work-family balance; stronger daycare support; smooth implementation of the work-family support system; and greater opportunities for full-time transfer assignment and a reduced income gap.
    In a survey that asked local government officials the effect of 50 policy measures taken by the Third Basic Plan reveals similar results to those obtained from the AHP, it is found that the expansion of personalized daycare and the elimination of grey areas that hinder work-family balance affect birth rates more than other measures. According to an analysis of detailed measures using the effect ratio (the ratio of their effect on tackling low fertility rates against the entire effect of all measures), 30% (or 6.592 trillion won) of the 2016 expenditures made in relation to low birth rates are irrelevant and spent on purposes other than the original one.  
    According to a survey on the need for additional funding for the implementation of policies that promote fertility, 67.4% (62) of the surveyed experts and 91.8% (157) of the local government officials responded that it is necessary to secure additional funding. Asked how to secure such funding, both the experts and the local government officials said that an increase in the rate of taxes, such as corporate income tax and income tax, and expenditure restructuring are the most feasible options. 
    By area of policy, improved work-family balance remains high on the priority list and has a greater effect according to the AHP and the survey on the local government officials, whereas its actual outcomes are lower than expected. The policy measure for the elimination of grey areas that hinder work-family balance accounts for a mere 4.6% of the entire 2016 government budget allocated to address low birth rates, and interestingly, its budget comes mostly from the nation's employment insurance fund, leaving employees of small- and medium-sized companies, who are not covered by the fund, in a grey area. To achieve tangible outcomes, the policy measure should be funded by the government budget and requires much attention and direct investment from the government, such as a nation-wide roll out of parental leave.   
    At the same time, policy measures taken to improve related social environments are found to be less effective in addressing low fertility rates. Such measures include: a measure for more job opportunities for youth, such as promoting and exploring overseas jobs for young people; a measure for a more inclusive society, such as expanding customized service for multi-cultural families; and a measure for education reform, such as creating an aptitude and ability-centered education system. In this context, it will be more desirable to either shift the fundamental directions and methods of the policy goal so as to put more focus on the issue of low birth rates itself than on peripheral issues or drop such less-effective policy measures.

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