We want more of you Korean babes

SEOUL - A US$20 billion sweetener is on the way for South Korean couples as the Government tries to lift the lowest birthrate in the OECD to fuel economic growth.

But the lure of cash is unlikely to change Hong Jaime's mind about not becoming a mother. "I don't want to get hindered by raising babies, in terms of time, money and energy," said Hong, 31, a magazine journalist, who has been married for three years.

The fate of South Korea's US$788 billion ($1.28 billion) annual economy may hinge on the lifestyle chosen by women like Hong. In the past 20 years, the economy expanded sevenfold but, after 2010, growth is expected to start to slow unless the birthrate rises.

"It's not a simple problem the Government can fix with a few policies," said Lim Eun Jung, 29, deputy director of President Roh Moo Hyun's committee seeking solutions to the demographic predicament.

She said the Government had to persuade citizens to back efforts to reverse the population trend. So it decided last year that urging women to have more babies was the best solution; Roh has pledged US$20 billion over five years to subsidise education, child care, maternity leaves and infertility treatments.

The problem is of the Government's own making. For 40 years, it discouraged families from having more than two children, fearing that population growth would undermine economic prosperity.

Abortion was legalised in 1973 and maternity benefits for women having a third child were ended in 1984.

Government statistics show the effort succeeded so well that births dropped to 476,000 last year from one million in 1970. Korea's fertility rate fell to 1.16 children per woman in 2004, the lowest among the 30 countries in the OECD.

It compares with 1.29 in Japan and Italy and 2.04 in the United States

Fewer births means fewer workers to pay taxes and less consumer spending. Lee Ji Pyeong, a researcher at LG Economic Research Institute in Seoul, said this created a ripple effect by cutting company profits, increasing state health and welfare payments, widening budget deficits and boosting debt.

He said: "For governments, it's a snowballing fiscal burden."

The Government's turnaround plan includes US$10 billion to pay 80 per cent of kindergarten fees for all children, with additional help for families with three or more children.

The goal is to increase births to the OECD average of 1.6 children per woman by 2010 and the Government is considering tax changes and encouraging companies to help foster larger families as well.

- BLOOMBERG