South Korea: Improving family leave benefits to boost birth rates

Employer Action Code: Act

The state budget for 2025 includes a number of measures to enhance benefits for families and encourage better work/life balance, in the context of record-low fertility rates and a rapidly aging population and workforce.

Key details

Improved entitlements to family benefits includes:

• Increasing employer-paid paternity leave from 10 to 20 days and extending government subsidies for related expenses for small and midsize companies to cover the full benefit period (i.e., from five to 20 days)
• Extending the eligibility period for paternity leave from 90 to 120 days after birth with a new option to take leave in up to three separate parts
• Increasing covered pay for parental leave benefits from social security from 1.5 million won (KRW) per month (for up to 12 months) to KRW 2.5 million for months one to three, KRW 2.0 million for months four to six, and KRW 1.6 million for months seven to 12
• Abolishing the six-month delay in payment of 25% of the childcare leave pay replacement benefits after claimants return to work (this was intended to discourage employees from taking the full parental leave entitlement and then leaving the workforce, but in practice it discouraged employees from taking parental leave)
• Establishing a new entitlement of up to two weeks of childcare leave per year and increasing pay replacement benefits from unemployment insurance of up to KRW 2.2 million per month for the time not worked (currently KRW 2 million) for employees working a reduced workweek for one to two years to care for a child under the age of 12 (currently under age eight).

Employer implications

Employers should review their family leave policies to prepare for the upcoming changes, expected to take effect from the start of the financial year in January 2025 following budget passage. These measures are the latest in a long list of initiatives this and previous governments have taken in the past few years to improve fertility rates, which are among the lowest in the world — recently reaching a new low of 0.72, a far cry from the replacement level fertility rate of 2.10.

Contact

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Chongson An

Head of Retirement, South Korea

email Email phone +822 3430 2561

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