South Korean Women's Wages Drop 7.7% After Parental Leave, Decline Continues for Two Years

A recent study by the Korea Women's Policy Institute reveals that women in South Korea face a significant financial penalty for taking parental leave, with their monthly wages dropping by 7.7% immediately after the leave. This wage gap persists for at least two years, highlighting a substantial short-term economic impact on mothers.

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Parental leave is an important system for reducing women's departure from the labor market immediately after childbirth, but if rigid working environments continue after their return, it is difficult to achieve long-term career maintenance.

The research, titled 'Study on the Impact of Work-Life Balance Systems on the Female Labor Market,' also examined international practices. It found that European countries like Denmark, Finland, the Netherlands, and Sweden utilize diverse flexible work arrangements, including part-time work, compressed workweeks, remote work, and flexible hours. These policies are closely associated with higher employment rates for women, especially those with young children.

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A system design that allows for phased linkage of reduced working hours and flexible work after parental leave is necessary.

In contrast, South Korea's system shows that while women who use parental leave have a slightly higher probability of remaining employed compared to those who don't, their re-employment prospects diminish over time. However, the study noted a positive correlation between flexible work arrangements and sustained employment. Women in companies that offer flexible work options demonstrated significantly higher re-employment probabilities in the second to fourth years after returning from leave, with the highest increase seen at the two-year mark.

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Flexible work should not be a welfare system for only some women or specific companies, but should be established as a universal work method that both men and women can utilize according to their life stages.

Furthermore, the study indicated that flexible work arrangements mitigate the wage impact of parental leave. While women in companies without flexible options saw their monthly wages decrease by 11.4% after leave, those in companies with such options did not experience a statistically significant drop. Researchers recommend a policy shift from solely focusing on parental leave to emphasizing post-leave employment retention, advocating for the widespread adoption of flexible work as a core infrastructure for career maintenance. They also suggest a phased approach to integrating parental leave with reduced working hours and flexible work options, particularly supporting small and medium-sized enterprises in implementing these systems.

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Support needs to be strengthened, considering company size and job characteristics, so that workers can continue to work after childbirth and childcare.