Parental benefit falls short on career retention, report finds

South Korea's parental benefit — introduced to offset income losses from childbirth and child-rearing and ease the financial burden of raising children — has shown positive effects in reducing the economic strain of childcare costs and expanding parents' choices in how they raise their children. However, only about one in two workers at small and medium-sized enterprises or in single-income households said the benefit helped them maintain their careers, a new report has found.

According to a report titled "Characteristics of Parental Benefit Recipients and Policy Implications," published Tuesday by the Korea Institute for Health and Social Affairs, the parental benefit can be received in cash or through childcare service vouchers, with cash recipients eligible for up to 24 months of payments. The average cash benefit receipt period among all survey respondents was 19.0 months.

When broken down by the mother's workplace, employees at small and medium-sized enterprises received cash benefits for an average of 17.3 months — shorter than those at large companies (18.1 months) or civil servants and public institution employees (19.5 months).

Kim Eun-jeong, an associate research fellow at the institute and the report's author, said the shorter cash benefit period among small and medium-sized enterprise workers "suggests that employees at small and medium-sized enterprises may not be sufficiently guaranteed time-support systems such as parental leave."

The report found that the parental benefit was broadly seen as effective in reducing the financial burden of childcare costs (82.1 percent) and expanding choices in child-rearing methods (75.6 percent). However, the share of respondents who agreed it helped with "maintaining employment and career continuity" or "allowed them to reduce income-generating activities and focus on raising children" was comparatively low, at 56.2 percent and 49.9 percent, respectively.

Respondents with higher household incomes, or those employed at large companies, public institutions or in civil service positions, were more likely to agree that the benefit helped maintain their careers than those who were unemployed, non-wage workers or employed at small and medium-sized enterprises.

The report also surveyed preferences on payment duration, assuming the total payout amount remained unchanged. The largest share of respondents — 43.7 percent — preferred keeping the current structure, while 41.4 percent said they would rather receive lower monthly payments spread over a longer period.

Among lower-income households, the unemployed, non-wage workers and small and medium-sized enterprise employees in particular, the preference for lower monthly payments over a longer period was relatively high. The report interpreted this as reflecting a desire to reduce gaps in support after the initial concentrated payout period and to receive more continuous childcare assistance, even at the cost of a lower monthly amount.

Kim recommended that the government "consider extending the parental benefit receipt period to some degree, taking into account that cash benefits are concentrated in infancy — including the first-meeting voucher — and to narrow the gap in cash support levels by age."

In 2022, the government restructured the existing home childcare allowance — which paid 200,000 won ($131) per month for children under 1, 150,000 won for those aged 1, and 100,000 won for children aged 2 through preschool — into an "infant allowance" of 300,000 won per month for children aged 0 and 1.

The government expanded and restructured the system in 2023, introducing the parental benefit. Monthly payments were initially set at 700,000 won for children under 1 and 350,000 won for 1-year-olds, before being raised again in 2024 to 1 million won and 500,000 won, respectively.