Allocation of funds in low fertility policy breeds distrust

Assessing the effectiveness of policies addressing low fertility in Korea proves challenging on two fronts. Firstly, despite an astronomical expenditure of 280 trillion Korean won (KRW) over the past 16 years, the nation currently holds the lowest total fertility rate worldwide, with a mere 0.78 births per woman. Secondly, the impact of these policy efforts on young couples considering parenthood is barely perceptible, as the substantial financial resources allocated for this purpose do not effectively reach them. Recent research suggests that an excessively inflated budget may have widened the perplexing gap between policy responses and the stagnant low fertility in Korea.

According to the Presidential Committee on Aging Society and Population Policy, a significant portion of the policy budget allocated for tackling low fertility in 2022, amounting to approximately 51 trillion won, is found to be indirectly related to addressing the low birth rate issue. Of the total budget, 40% was directed towards residential support, primarily encompassing 23 trillion won in loans for house purchases or rental deposits that must be repaid. The Korea Housing and Urban Fund, overseen by the Ministry of Land, Infrastructure, and Transport, provides low-interest loans to young individuals and newlyweds. This budget portion has been mistakenly considered part of the measures targeting low fertility, thereby inflating the overall budget figure. While housing prices have been identified as a significant factor in addressing the low fertility rate, as certain studies conducted by state-affiliated research institutes indicate that a 1% increase in housing prices may lead to a reduction of 0.014 persons in the total fertility rate over seven years, the budget number has been carelessly amplified without genuinely allocating funds to promote an increase in the birth rate.

The budget allocated for addressing low fertility also encompasses expenditures on collaborative projects to foster partnerships between businesses, academia, and the government to develop leading educational institutions. The budget even includes funds allocated for the construction of “green” and technologically advanced school infrastructure, such as the installation of solar panels during school renovations, salary increases for civilian employees and noncommissioned officers in the Ministry of National Defense, as well as those designated for supporting victims of digital sex crimes by the Ministry of Gender Equality and Family. By removing these unrelated allocations, the budget directly tied to addressing the low fertility rate, which includes provisions for parental leave, childcare support, and child allowances, amounts to approximately 30 trillion won in 2019, equivalent to 1.56% of the nation's GDP. This falls significantly short of 70% of the average among OECD member states (2.25%). Those responsible for inflating the numbers should take accountability for undermining the efficacy of these initiatives and fostering unwarranted distrust, helplessness, and skepticism that indicates regardless of the amount of money poured in, the underlying problem of low fertility may persist.

The government's policy efforts have fallen short, not due to insufficient spending, but because the allocated funds have not been utilized wisely and appropriately. A recent survey revealed that unmarried individuals, on average, expressed a desire to have 1.8 children. It is high time to reorient our focus towards fundamental policies encouraging those who genuinely aspire to have children rather than seeking elusive magical solutions. Non-relevant budgetary allocations should be eliminated, and resources should be redirected to policies that have demonstrated tangible results.