Having a Baby? This Company Will Give You $72,000

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2:35Hongi is a 37-year-old father of two living in South Korea. After his second child was born last year, he took six months paid paternity leave to take care of the kids.

2:51And to welcome his new baby, the company also gave him$72 ,000, no strings attached. Honggi says when he got the news, he was so excited he couldn't sleep. And the good news didn't stop there. Honggi and his wife learned his company would give him another$72 ,000, retroactively applied for their first child, who was born in 2021.

3:21Hong Gi says thanks to that gift, he and his wife have been able to move to a bigger house. They're also thinking about having a third child.

3:36Hong Gi's company, a construction firm called Buyong, is one of dozens of firms in Korea offering financial incentives to employees if they have babies. Bloomberg's Hong Hee Shin says these companies are hoping the baby bonuses, together with a host of other family-friendly policies, will help boost South Korea's fertility rate. That's now at just 0.75 births per woman, the lowest on the planet. Korea is indeed facing a population crisis. The population is projected to shrink by almost a third by 2072. If we don't do something, and it has massive implications, There will be a shrinking workforce, tax revenue will be falling, and Korea is technically at war against North Korea.

4:24And there will be no people joining the military to protect the country.

4:35This is The Big Take Asia from Bloomberg News. I'm Won Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons, and businesses that drive this ever-shifting region. Today on the show, why are Korean companies paying their employees big bucks to have babies? And are baby bonuses a long-term solution?

5:07Global birth rates have been declining for decades, falling from five births per woman in 1960 to just above two last year. The phenomenon is especially pronounced in South Korea, which has had the lowest birth rate in the world for most of the past two decades. It's a top priority for the government for many years. And last year, the former president, he declared a national demographic emergency. Hyunhee Shin is a Bloomberg reporter based in Seoul. So the government has been spending hundreds of billions of dollars to fix the problem. Developed countries with low birth rates like South Korea worry that unless they have more babies, they won't have enough workers to support their economies and enough taxpayers to support their aging populations.

5:55In South Korea, the government's tried expanding child care subsidies, extending parental leave, offering mortgages at lower rates, even offering financial support for Seoul residents looking to reverse vasectomies. By law, a couple can have combined three years of shared parental leave. You can use those three years at any time and up until your child becomes eight years old. Korea is not the only Asian nation offering incentives to would-be parents. In Hong Kong, residents are entitled to 14 weeks of paid maternity leave and a one-time baby bonus of$2 ,600 U.S. dollars. In Japan, families with three or more kids are eligible to get most of their university tuition fees covered by the government.

6:41But Korea's efforts to tackle its declining birth rate go above and beyond what many other countries are willing to do. And now, Korean corporations like Booyoung are jumping in with initiatives of their own. They were the first one to go very big. And the founder, he's pretty old. He's 84, but he's been doing lots of philanthropy work over the past several years. And February last year, the company usually holds New Year ceremonies. So where the founder comes up and then he gives a speech. It was supposed to be just a regular ceremony, but he made a surprise announcement. The founder announced the company would give 100 million Korean won, about$72 ,000, to every employee who welcomes a baby.

7:28And the new policy applied to all babies born within the past three years. There was a literal silence and then some people were shouting and then some people were almost breaking up in tears. For some couples, it was like winning the lottery. $72 ,000 is about double the annual per capita income in Korea. And the money goes directly into the employee's bank account and isn't taxed by the government. You can't really buy a house with that, but you can get a new car and then you can hire some people who can help take care of your baby or your house. At Booyang, the bonus doesn't have any conditions attached.

8:09Employees can even get their baby payout and quit the next day. But no one has. Out of the 100 or so employees that have gotten the bonuses, Booyoung said all are still with the company. And since introducing the baby bonus more than a year ago, the company believes it's seeing an impact. Booyoung has given out the bonus to about 100 employees so far, and they paid 28 employees last year. That's about five people more than the previous three years on average. And the company thinks the policy did encourage some people to have babies. And in Korea, the corporate culture has been pretty rigid. And it's also a construction company where it's dominated by male employees mostly.

8:55So it has to be long work hours and a very paternalistic office culture. Because they introduced this policy, employees are encouraging each other to have babies and then get married and be on parental leave. So there is some change in the making. Hyonghee says Booyoung's apparent success has inspired other big companies in Korea to follow suit. She found dozens of public and private companies are offering payouts to employees who have babies. And handouts like these are costing Korean companies millions of dollars a year. With Booyoung, it has more to do with the founder's philosophy. He's a patriotic man, and he's been saying he wanted to give back to the society.

9:41For other companies, they see it as part of their corporate social responsibility progress, and it also helps them bring talent. In the end, these companies think paying workers right now to have babies could be cheaper in the very long term than running a business in a country where you have no babies and no workers to hire. But it's unclear if these incentive programs will do that much to boost Korea's birth rate. That's because baby bonuses only address one part of the problem, expensive child care in developed countries. The decision-making about whether and when to have children is very complex.

10:21Kathleen Mogulgaard is the president and CEO of the Population Institute, a nonprofit in Washington, D.C. that researches population trends. Often it is about the cost of raising a child, but there are also a number of personal decisions about timing, about spacing, about the kinds of relationships we have in our life, around whether or not we feel like that is the kind of future that we see for ourselves and for our families. Other countries that have introduced baby bonuses have seen only short-lived success in boosting birth rates. Australian Hungary provided cash handouts to new parents at various times in the past two decades.

11:01And while they saw an initial bump in births, their birth rates eventually declined again. What we have seen so far is that governments sometimes invest a lot of resources in these kinds of incentives, and it doesn't move the needle in any significant way that we have seen so far. In Korea, though, there are glimmers of hope. The country's birth rate went up last year. for the first time in a decade. And while it's not clear what the exact reason was for the uptick, or if the trend will continue, almost all experts agree that handouts aren't a permanent solution. Structural changes are. In places where fertility is dropping very low, that can serve as a signal to governments to take a look at what is happening in society that is resulting in these kinds of extremes in fertility patterns.

11:57And that could invite us to better understand the barriers that they may be experiencing to achieving their childbearing desires. There may be things that are playing out in terms of gender equity, inflexible work policies, or dynamics culturally within the household that might serve as disincentives for women to have a child or have another child.

12:24After the break, the economics of declining birth rates and what could work to persuade people to have more babies.

13:07Thank you.

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14:30Although women have been having far fewer babies on average compared to previous generations, the world's population is still growing overall. The United Nations says only around 60 countries are seeing their populations decline, but the population in more than 120 other countries, including the United States, is still growing. and appears on track to keep growing for the next 30 years. Even though there is kind of this panic right now about population decline, we are actually in a period of continuing population growth for decades to come. Kathleen Mogelgaard from the Population Institute sees it this way.

15:10We're not living in a period of demographic decline, but demographic diversity. The world's population is likely to add another 2 billion people through this century. We're currently at about 8.2 billion people globally. Projections from the United Nations indicate that we are likely to continue to grow through this century globally to about 10 or more billion by the mid-2080s. She says in some ways the story of the birth rate decline is actually one of progress. There have been more opportunities for women and girls around the world, an expansion of rights for women and girls when it comes to education, when it comes to entering the workforce, and when it comes to accessing the services and the information that enable women to have agency over their reproductive lives.

16:03And new research shows that in places with ultra-low fertility rates like South Korea, gender dynamics have a lot to do with why women are having fewer kids. Emerging research indicates cultural changes around gender roles and the greater sharing of household responsibilities and duties between men and women is something that can be really supportive of women's decision making about whether to have a child or to have another child. When she can have that assurance that those responsibilities will be shared equally. And while South Korea's fertility incentives and baby bonuses are aimed at supporting its economy, Kathleen argues countries don't necessarily need more babies to sustain their economic growth.

16:50So, for example, in Japan, which has been in population decline for quite some time, the per capita GDP in Japan continues on an upward trajectory. So if we're thinking about what it means to have a healthy economic life for the individual, there has been continued economic growth on an individual level, even as that country is experiencing population decline. So the overall economic picture for countries is less about the number of people, but more about kind of economic productivity within a country. And there are lots of different ways to stimulate economic productivity. We can invest more in training and in education for people.

17:32We can think about ways to shift economic systems so that we get greater output from the same number of people or fewer numbers of people. To maintain a stable population where there's no growth or decline, the average woman needs to have roughly two children. Bloomberg's Hyeong-hee Shin says South Korea is still a long way short of that number. And even the South Korean government acknowledges that to close that gap, it'll need more than a few companies offering baby bonuses. Their goal is to raise the fertility rate to one by 2030. Right now it's at 0.75. And the government panel that I interviewed said you have to be working five times harder to reach that goal.

18:23Experts say money is a good way to encourage people to have babies, but you know, there has to be more other issues being resolved. So at smaller companies, you might not get a bonus, but they can be more flexible. It has to come all together to move the needle and bring about real change.

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