① Maternity Protection and Promotion of Female Employment
Korea has experienced rapid changes in systems related to maternity protection and promotion of women’s employment. The government has pushed ahead with strengthening the maternity protection system by lengthening childcare leave from the former 60 days (`97) to 90 days (`01), by increasing the amount of childcare leave benefit from 200,000 won (approx $179 USD) in 2002 per month to 500,000 won ($448) in 2007, by expanding the number of in-company childcare facilities, by allowing workers to use their childcare leave in installments, by reducing working hours for the purpose of childcare, by providing time for prenatal diagnosis, by extending paternity leave, and by implementing Affirmative Action.
These efforts have led Korea to have one of the highest maternity protection among OECD countries, particularly granting total 2 years of childcare leave per couple with children under the age of 6, and the only country obligating private companies to set up company-based childcare facility.
Despite these efforts, however, Korea has one of the lowest birth rates in the world, and its women’s labor market participation rate has stagnated – due to fundamental problems such as the high costs of housing and of private education, insufficient infrastructure for quality childcare, and the rigid wage system. In response, the government has announced the「2nd Low-Fertility and Aged Society Master Plan (`11~`15)」(Saeromaji Plan 2015), which is expected to cause some side effects as the interests of stakeholders, Korea’s economic conditions and business environment are not fully reflected.
In particular, reducing work hours for the purpose of childcare, increasing childcare leave benefits, and publicizing a list of companies not fulfill their obligations to install in-company childcare facility and introduce family leave could cause many side effects, such as constraints for enterprises in human resource management, high cost of employment, and deepening employment insurance deficit. This would weaken the competitiveness of enterprises and basis of job creating environment, rather than resolve the problem of the nation’s low birth rate. The government therefore needs to develop measures to minimize such side effects on the process of shaping the plan.
<Table> Provision of Family-Work Reconciliation in Saeromaji Plan 2015
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○ Increase childcare leave benefit
– 500,000 won ($448) per month (current) → 40% of ordinary wages (1,000,000 won ($897) maximum, 500,000 won ($448) minimum)
○ Introduction of work hour reduction request for childcare,
and strengthening of family leave
– If workers request such work hour reduction, employers are obliged to permit it (with exceptions in special cases)
○ Penalty for violating requirement to set up company-based childcare facilities
in private enterprises
– Currently mandatory, but with no penalty → publicizing list of companies not installing childcare facilities
○ Extending paternity leave with paid holidays
– 3 days unpaid leave (current) → 5 days (3 days paid)
○ Installment of childcare leave
– Maximum 90 days of childcare leave (45 days off after delivery) → workers allowed to take childcare leave in installments
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Increase Childcare Leave Benefits (40% of ordinary wage) ⇒ Implemented from Jan. 1 2011
Childcare leave was originally unpaid leave, but since 2002 employment insurance covers 200,000 won ($179) per month. At the beginning, childcare leave was offered to employees with a baby less than one-year old, for less than one year. Childcare leave was then extended to cover employees with infants under the age of three in 2008, and further to those with children at the age of 6 or under as of February 2010.
The childcare leave benefit was 200,000 won($179) per month in 2002, but increased steadily to 300,000 won($269) per month in 2003, 400,000 won($359) in 2004 and 500,000 won ($448) in 2007. The childcare leave benefit has now been raised even further, to 40% of ordinary wages (maximum 1,000,000 won($897), minimum 500,000 won($448) per month) as of Jan 1, 2011, by revision of the Enforcement Decree of the Employment Insurance Act in 2010. Under such a childcare system, however, employers can expect various side-effects such as high employment insurance costs, administrative difficulties in recruiting and training alternative workers, discontent among workers due to increased workloads, and moral hazard among employees.
② The Working Hour Savings Account System
The Working Hour Savings Account System is similar to systems in some European countries, with the view of improving the practice of long working hours in Korea. Under the system, employees are granted with vacation time, instead of wages, for their overtime, night, and weekend work.
Many reasons for the long working hour practice in Korea have been cited, but the biggest reasons are the high overtime pay rate and the compensation paid for unused vacation (when companies do not actively recommend that employees use their paid vacation, as the law stipulates, companies must pay them money in compensation for unused vacation days). Employees prefer to work overtime, and tend to receive money rather than to use all of their paid vacation days, resulting in the long working hour practice.
According to the government, the Working Hour Savings Account System will be implemented based upon agreements between management and labor. Details such as the saving period, the account balancing period, and the methods of use will be negotiated between the employees and companies. The government expects the systems to reduce the current long working hour practice, improve employees’ productivity and companies’ competitiveness.