Free daycare services take big cut

State will no longer provide benefit for children under 3

By Yi Whan-woo

The government said Monday it will scrap free daycare services for all children aged 2 or under throughout the country due to a shortage of funds.

The Ministry of Health and Welfare from next March will only issue up to 200,000 won ($170) per month to each household for those with children in the lowest 70 percent-income bracket.

“I’d like to give my sincere apologies to those families who will be excluded from receiving benefits,” said Lim Chae-min, the minister of health and welfare.

“Excluding the top 30 percent income earners from the program is to strengthen the reasonable spending of the government budget.”

Instead of cash payments, those in the top 30 percent income will be given vouchers providing some benefits to help with the rearing of children.

The plan for cash payments, along with other child rearing benefits, will be reflected in the government’ budget plan for next year. The plan will be released by the Ministry of Strategy and Finance this week.

The decision to exclude the top income earners from cash benefits comes after repeated opinions from experts. They said free daycare services will encourage parents to send their children to such facilities even though children 2 or under are far better off staying at home with their parents than spending time with strangers.

The decision was made after the central government expanded free nursery services to all children aged 2 and under in March regardless of households’ income levels by spending an extra 369.8 billion won ($330 million).

The previous subsidy was only eligible to households who were in the lowest 70 percent-income bracket.

The number of children eligible for childcare services increased from 650,000 in 2011 to 780,000 this year.

The ministry found that running the program has required an additional 642 billion won ($573 million) in state and provincial government budgets.

Local governments have criticized the central government as it asked them to bear the burden after running out of funds. They also suffered from financial difficulties, especially district offices in affluent parts of Seoul where a number of children aged 2 and under are from families in the top 30 percent income bracket.

Both sides once reached an agreement in September on allotting additional funding for the program.