South Korea Leans Hard Into Baby Bonuses. NewsWire

NewsWire: 9/20/22

• South Korea plans to triple its monthly baby bonuses by 2024. This news comes amid its latest birthrate data, which confirmed a new record low. (Bloomberg)
• NH: During former Korean president Moon Jae-in’s administration, families with newborn babies in South Korea received 300K won a month (around $216) during the baby’s first year. Now, under President Yoon Suk-yul, that amount is getting tripled and will also be offered for a longer period.
• Under Yoon’s plan, newborn babies will receive a monthly allowance of 1.0M won ($740). The current amount will be adjusted upwards beginning next year and will start at 700K won before rising to the full amount in 2024. After the child’s first birthday, the bonus will drop to 500K won and continue for another year.
• As of 2020, the average monthly household income in South Korea was 3.2M won. A monthly stipend of 1.0M would boost that by almost a third. Given that median monthly earnings in the United States is just over $4K a month, this is not an insignificant amount in U.S. dollars, either. It would represent a +17% boost in income.
• The increased stipend is a notable outlier in Yoon’s overall fiscal agenda. Last month, he announced that he wants to cut government spending for the first time in 13 years and rein in pandemic-era stimulus. Public infrastructure spending and business subsidies are both set to be cut dramatically, but social welfare is off the table as the country redoubles its efforts to raise the birthrate.
• News of the stipend came just a few days after the country’s final fertility rate data were released for 2021. They confirm the original provisional figure: 0.81. (See “South Korea’s TFR Drops Again.”) Yet again, South Korea’s fertility rate was the lowest in the world. Some experts are already predicting that it might drop below 0.80 next year.
• South Korea’s population has declined for the last two years. If current trends continue, the population is projected to shrink from around 52M today to just 25M in 2100. That would make the country the same size it was after the Korean War.