The real reason why a South Korean employer is paying employees $75,000 just to have children

The cost of living has skyrocketed in countries across the globe and raising children has also become expensive for young couples. This is one of the factors behind the global trend of declining birthrates, something that is also a cause for concern looking at countries such as Japan with an ageing population. Women are reluctant to give birth and raise children while juggling busy career obligations. To tackle this, a South Korean employer has come up with a solution that turns parenthood into a truly rewarding experience. 

Lee Joong-Keun, the founder and chairman of a construction company called Booyoung Group decided to give bonuses to the workers in his company if they plan to have children. The Seoul-based company will be giving out 100 million Korean won which is equivalent to $75,000 each time one of their employees has a baby. Lee believes that this just might help to reverse the country’s declining birth rate, as per Fortune.

“If the current state of low birth rates persists, we will face a national existential crisis such as workforce decline and a lack of defense manpower necessary for national security,” 84-year-old Lee told the outlet. “The low birth rate results from financial burdens and difficulties in balancing work and family life, so we decided to take such a drastic measure. If land is provided by the government, for employees with three or more children, we’ll let them choose between a childbirth incentive equivalent for three newborns. Or a public-housing-like rental home with no tenant tax burden or maintenance responsibilities."

This scheme will benefit male and female employees equally, as per the company's statement to CNN. The Booyoung Group is doing more than just providing childbirth incentives to employees of the company. They are also helping the workers to ease their financial burden and providing monetary support to those who have children so that they can pay for college tuition. The company even provides childcare allowances and carries medical expenses for direct family members. Lee has also proposed a new tax deduction system to remove corporate and income tax so that his employees can receive the full benefits of the parental incentives.

As of 2024, South Korea has the world's lowest fertility rate and it is suspected that in the following year, the number of South Korean women will drop to the rate of 0.65. Experts reveal that a country needs to have a 2.1 rate to maintain a stable population minus immigration. According to Korea JoongAng Daily, the Booyoung Group became the first firm in the country to provide “substantial cash support” for every newborn. Some believe that Lee's generosity comes from his own experience of growing up in a small village in the country. His rags-to-riches journey has not been smooth since he had to serve time in jail for tax evasion and embezzlement of company funds in 2004. 

The billionaire was arrested once again in 2018 for similar charges against him but was released on parole in 2021. He still went ahead to introduce rental housing in South Korea and caught media attention by handing out cash to people in need. In 2023, Lee donated more than $100 million in cash to the residents of his hometown Unpyeong-ri, and alumni of its local school. Lee reportedly wanted to express his “thanks to the support of villagers" especially during the time he spent in prison. But with this scheme, it is said that the construction giant itself might receive tax benefits from the government.

Editor's note: This article was originally published on July 7, 2024. It has since been updated.