The Korean welfare state: a paradox of expansion in an era of globalisation and economic crisis

When the Asian financial crisis took a heavy toll on Korea in the late 1990s, policy makers responded by extending welfare policy. For many analysts, this was a paradoxical move, marking a fundamental reconfiguration of the social policy system. This article contests that interpretation. It examines the changes made to Korean social policy in recent years, and considers their impact on the Korean welfare state. It notes both that welfare extensions have been comparatively limited, and that they have often formed part of wider attempts to boost labour market flexibility. It thus concludes that limited expansion of the Korean welfare state is chiefly an attempt to bolster industrial competitiveness and economic growth. For now, Korea retains the productivist social policy orientation that has long characterised it. It also concedes, however, that in the future underlying social change, notably a rapidly ageing population, may prompt policy makers to make significant changes to the Korean welfare state.     

Social Welfare Reform Since the 1997 Economic Crisis in Korea: Achievement, Limits, and Future Prospects

Social welfare reform has been implemented in Korea since the 1997 financial crisis. A dominant concern of the reform was on equality and social solidarity. A major means to this end was establishing universalistic social insurance programs like those in developed welfare states. The reform efforts produced some positive results but were not greatly successful. Income polarization and the deteriorating economic status of low-income families have become big social issues. Many low-income families have not gained many benefits from the reformed social security system. The rapid aging of the population is creating an exploding demand for social spending, risking the fiscal sustainability of major social insurance programs. The reform experience suggests that a social welfare system based on western-style universal social insurance may be too expensive to sustain and not very effective in protecting disadvantaged families in Korea. More attention is being paid to expenditure control and efficiency. Social insurance programs may need to be leaner than those in traditional welfare states. Targeted programs, such as the "making work pay" policy, are likely to be expanded more broadly to low-income families. The future of the Korean welfare state may hinge on successful employment support for working families and extensive investment in their human capital.     

Economic crisis and social policy reform in Korea

The economic crisis that broke out in Korea in December 1997 has had a chilling impact on social development in the country. Today unemployment is the highest that Korea has experienced in the past thirty years. This paper aims to examine the impact of the economic crisis on social development and the role of public policy to mitigate the problems caused by the crisis. The economic crisis has hit vulnerable groups harder, increased the proportion of part-time and daily workers, and reversed the trend of steady improvement of income distribution. The economic crisis along with the trend of aging population, globalization, and competition calls for an expanded role of social policy, which the Korean government has neglected for a long time. The main targets of social policy reform in Korea include the expansion of government programs and safety nets for the unemployed and redesigning the national pension and health insurance scheme to provide adequate income security as well as to improve the system sustainability.     

Social protection for happiness? The impact of social pension reform on subjective well-being of the Korean elderly

Expanding the scope of the traditional indicators used to assess economic progress with measures of subjective well-being has been of growing importance in policy modeling. A recent Stiglitz-Sen-Fitoussi report argued that policy decisions and welfare evaluations should be approached from a broader perspective on well-being and take into account metrics derived from self-reports of living conditions. To this end, we evaluate the efficacy of the 2014 social pension reform in South Korea using various measures of subjective well-being. The South Korean government introduced a basic old-age pension in 2008 and doubled its monthly benefits in 2014. The reform in 2014 represents one of the largest social welfare expansions in South Korean history, with an aim to improve seniors’ quality of life. Using data from the Korean Longitudinal Study of Aging, we estimate a matched difference-in-differences model that isolates the causal effects of the benefit increase attributable to the reform. Results show that the reform was associated with an average of 4.8–5.7% increase in financial satisfaction among beneficiaries, and that this correlation was more pronounced for retirees, seniors above age 70, and those at the bottom of wealth distribution. However, there is insufficient evidence to conclude that satisfaction with health status, parent-child relationship, and overall quality of life has improved in response. Our findings are in contrast to the past evidence on objective welfare gains associated with pension expansion. Taken together this study calls for the use of self-reported well-being data in policy evaluation.     

Social Policy in Greece: Rhetoric versus Reform

This paper reviews the major social policy developments in Greece during the 1980s and 1990s, focusing on social security, health and employment policies. It argues that the concept of social policy and the practice of politics have been distorted in this country. Social policy reflects the legacy of a heavily politicized and centralized policy‐making system, an impoverished administrative infrastructure and poorly developed social services. Its emergence is characterized by the pursuit of late and ineffective policies. It lacks continuity, planning and coordination, being oriented towards short‐term political expediency. It is largely insurance‐based, reproducing huge inequalities and institutional arrangements which are behind the times. It provides mainly cash benefits, low‐quality but rather expensive health services and marginal social welfare protection. Moreover, the lack of a minimum income safety net confirms the country's weak culture of universalism and social citizenship. By implication, complex policy and interlocking interest linkages have tarnished the “system” with a reputation for strong resistance to progressive change. At the same time, sources of change such as globalization, demographic developments, new household and family/gender patterns, unstable economic growth, fiscal imperatives, programme maturation, as well as persisting unemployment, changing labour markets and rising health care costs, have produced mounting pressures for welfare reform.     

‘Let the King Save the Poor’: The Discursive Mechanism Underlying the Under‐exercise of Social Rights in South Korea

This study was prompted by discrepancies observed between the quantitative expansion and the qualitative stalemate in social policy in South Korea. Despite a revamped social security system, changes in South Korean social policies have not led to significant coverage expansion or improved income and poverty distribution. The frequent appearance of the Korean proverb that ‘even the King cannot save the poor’ in policy participants' narratives reflects a lack of confidence in the Government's ability to address persistent social disadvantages and the prevalence of a fatalistic policy perspective. This proverb has a conceptual affinity with an individualistic approach and has effectively functioned as a governance tool to oppress the progress of welfare rights. This research shows that an expenditure‐based model could lead to actual policy situations being misrepresented. Further, institutional policy arrangements may not be a sufficient condition for improving policy performance. It is suggested that a rights‐based approach should be adopted for both theorization of the transition of the welfare regimes and discursive practice for a policy paradigm change.     

The reform of the developmental welfare state in East Asia

This article examines social policy reforms in East Asia and whether the welfare states in the region became more inclusive in terms of social protection while maintaining their developmental credentials. It draws on findings from the United Nations Research Institute for Social Development (UNRISD) project on social policy in East Asia, covering China, Hong Kong Special Administrative Region of China, Japan, Malaysia, the Republic of Korea, Singapore, Taiwan Province of China, and Thailand. It shows that East Asian economies responded differently to the crisis in terms of welfare reform. While Singapore and Hong Kong maintained the basic structure of the selective developmental welfare state, Korea, Taiwan, and, to a lesser extent, Thailand implemented social policy reforms toward a more inclusive one. Despite such different responses, policy changes are explained by the proposition of the developmental welfare state: the instrumentality of social policy for economic development and realization of policy changes through democratization (or the lack of it).     

Straddling Two Continents: Social Policy and Welfare Politics in Turkey

There has been an increasing academic interest in understanding the dynamics of social policy in the Middle East and developing a conceptual ‘model’ to account for the particular characteristics of welfare arrangements in the countries of the region. While part of this framework, Turkey represents an exceptional case due to the Europeanization processes the country is undergoing in various policy areas, including social policy. The influence of the European Union on the shape of Turkish social policy, as illustrated by the government's recent reforms in the labour market and social security domains, is hereby used to outline the position of Turkey vis‐à‐vis both the Southern European welfare regime and the Middle Eastern pattern. This article seeks to assess the dynamics of Turkish social policy in light of the country's political, and socio‐economic dynamics, as well as the external influence exerted by the EU and international financial institutions. The aim is to examine Turkish welfare arrangements in a comparative manner and consider its suitability with reference to either of the two models. Looking at major trends in social security and the labour market, the article argues for a Turkish ‘hybrid’ model embodying the characteristics of both. Subject to EU explicit pressures for reform absent elsewhere in the Middle East, the data nevertheless show that Turkey has yet to make the qualitative leap forward that could place it firmly within the Southern European welfare group.     

Another dimension of welfare reform: the implementation of the Employment Insurance Programme in Korea

A shift in policy goals at the central decision-making level does not always produce the expected degree of change in policy implementation. This article investigates what actually happens at the local level in respect of the implementation of the reformed Employment Insurance Programme of Korea through case studies covering three district governments. Given the sources of difficulty in implementation, local case studies show that the change that welfare reform sought has not fully materialised in reform implementation. Therefore, successfully pursuing welfare reform must involve the necessary change in the implementation process that follows reform decision-making.     

Productive welfare: Korea's third way?

How can the various pressures of economic globalisation and changes in the established welfare systems of the industrialised nations inform the development of the Korean welfare state? As the twenty‐first century dawns, Korea is confronted with a serious dilemma: How to adapt to globalisation and survive under worldwide competition and at the same time construct an effective egalitarian welfare state? The objective of this paper is to explore the future directions for the Korean social welfare system as it adjusts to economic globalisation. As it seeks a course between the social democratic welfare state model and the rising tide of the neo‐liberal welfare state, we pose the question: Is there a ‘third way’ for Korea? In trying to discern where the Korean welfare state is headed, it may be helpful to understand where it has come from and how it compares with the established welfare states in the industrialised nations.     

Inadequate Policy or Operational Failure? The Potential Crisis of the Korean National Pension Programme

The Korean National Pension Programme is one of the main pillars of the Korean welfare state. From its introduction in 1988, the Programme had come to include 26.8 per cent of the economically active population and had accumulated a pension fund equal to 24 per cent of government expenditure by 1994. Behind such a promising facade, the Korean National Pension Programme is likely to face financial crisis without a major reform. This paper seeks to answer the question as to whether the crisis will arise due to inadequate policy design or to operational failure. The latter cause may require privatizing the Pension Fund in order to operate more efficiently, while the former one would demand rectifying the defects of policy design. This study argues that the crisis is strongly related to inadequate policy design, which promises generous pensions and at the same time requires only a small amount in contributions; although there have also been operational inefficiencies in running the programme. It also argues that inadequacy in policy design stemmed from developmentalism embedded in the Korean welfare state, which regards the National Pension Programme mainly as a measure for mobilizing cheap capital. In conclusion, this paper argues that the Korean welfare state, created in the era of economic development, is transient in nature and that it needs a major reform not only to contain the cost but also to meet the growing demand for social welfare.     

Welfare reform and future challenges in the Republic of Korea: Beyond the developmental welfare state?

Since the economic crisis of 1997–98, the Republic of Korea has carried out vigorous social policy initiatives including the reform of the National Pension Programme and National Health Insurance. This paper seeks to answer whether the country's welfare state has moved beyond welfare developmentalism, by examining the cases of those two programmes. By the reform, the coverage of the National Pension Programme was extended to the whole population; and its financial sustainability and accountability were enhanced. Regarding National Health Insurance, efficiency reform was carried out on the management structure, while reform regarding financing was put on hold. These reforms were in clear contrast to the welfare developmentalism that used to place overwhelming emphasis on economic considerations. Despite these reforms, however, the Republic of Korea's welfare state faces the issues of ineffectual implementation and lack of financial sustainability of social policy. The National Pension Programme has failed to cover the majority of irregular workers, whose numbers are on the increase, and National Health Insurance needs to find a way to meet increasing health expenditure.     

British and European Influences on the "Australian Way" from the 1980s

Commonwealth countries share their British social policy legacy in a variety of ways. Autstralia attempted to adopt the postwar "new Fabian" welfare state model at the very time when international economic circumstances undermined its Keynesian foundation. With Labor governments in power from 1983 to 1996, Australia diverged significantly from the neo-liberal reform path adopted in the United Kingdom. Australian governments looked increasingly to European social democracies for alternative social policy models. In a manner anticipating the "Third Way", the tendency was towards mixing neo-liberal economics with social democratic welfare. The Australian "Third Way" which resulted proved unstable. Current social reformers, the paper proposes, ought to revisit a neglected but characteristically British emphasis on the need for a measure of "socialization of investment" to underpin redistributive strategies.     

Why Health Care Reform Now? Strategic Framing and the Passage of Obamacare

Economic reform and health care reform were both focal points outlined in President Obama's policy agenda, with increasing pressure to address economic and social insecurity given that President Obama entered office during the Great Recession (2007–09). The Patient Protection and Affordable Care Act (commonly known as ‘Obamacare’) successfully passed in March 2010 in the context of the economic crisis. We argue that the strategic framing of the economic crisis, through reasoning and arguments linking health care reform with economic downfall, is important in understanding the successful passage of Obamacare, and that this is reflected through strategic frames in speeches delivered by the President on health care reform. Health care reform has been successful not in spite of but rather because of the economic crisis of 2008, that allowed President Obama to use a strategic frame focusing on costs and economic problems. The two main frames identified are the ‘market’ and ‘rights’ frames. President Obama's strategic frames specifically surrounding the economic and cost‐containment priority of health care reform are categorized as a ‘market’ frame in this article. He used this frame until the passage of the law in 2010, when the frame shifted to ‘rights’ frames, largely portrayed through anecdotes and focused on the concept of ‘access’ to care rather than the ‘cost’ of care. This is observable through tracking speeches and statements made in support of health care reform between 2009 and 2013.     

Housing policy and asset building: exploring the role of home ownership in East Asian social policy

Western societies promote home ownership in the belief that it provides a means to build up individual welfare and security, potentially offsetting the inadequacy of social security to meet needs in retirement. Some East Asian economies have long focused on advancing ‘asset building’ through housing policy. These efforts have two purposes: to use housing investment to drive economic development and to build family assets throughout life as a component of income protection for old age. These purposes work well in some countries but not as well in others. In policy terms, the common element among them is that governments promote home ownership as a component of social policy or as a complement to mainstream welfare. This article examines how home ownership fares as a form of asset-based welfare in selected East Asian countries (Singapore, Hong Kong and Japan) and considers the implications for understanding the role of institutions in development.     

Demographic Transition,Developmentalism and Social Security in China

This article studies the current demographic transition in China and its implications on the country's social welfare reform, particularly its Old Age Social Security (OASS) development. The developmental approach is analyzed to examine how developmentalism affects China's social welfare reform. Reviewing the historical development of the OASS system after the 1980s, this article discusses the major issues and concerns under the current system and the challenges it faces for future development. Further studies are called upon to address these issues in order to build a financially sound and socially equitable welfare system in China.     

Rise of the Regulatory Welfare State? Social Regulation in Utilities in Israel

This article explores the relation between economic liberalization, regulation and welfare. It asks how the state regulates, delays or prevents service disconnection due to debt and arrears, and what this kind of policy implies regarding the use of regulation as a form of social policy. This is done through a comparative study of the electricity and water sectors in Israel after liberalization. It finds that after initial economic reform, both sectors saw a growth in regulation intended to compensate for the social effects of reform, in what may be termed the ‘regulatory welfare state’. However, this form of social protection has been residual and incoherent. The article argues that trying to separate economic reform from its social consequences is unrealistic and may lead to adverse social and economic results. Second, findings raise concerns regarding the potential of the regulatory welfare state to deliver effective and fair social policy.     

Ageing Society Issues in Korea*

Korean society is facing unprecedentedly higher population ageing, particularly in the first half of the 21st century. The implications of population ageing have a much wider effect than the welfare of the elderly. From a broader and long‐term perspective, understanding population ageing may require a new paradigm. Korea has attempted to model its policies for ageing society on those of advanced welfare states, but as these no longer seem viable, Korean policy‐makers are searching for more effective and efficient measures to deal with its rapid ageing population. Reflecting a broader and long‐term perspective, the Korean government recently produced a comprehensive national policy plan to deal with the consequences of rapid population ageing. This article outlines the phenomenon of population ageing in Korea and the recent development of national policies for population ageing, describing the Korean comprehensive national policy plan for responding to it and examining major issues and problems related to developing and implementing the plan. This article finally suggests a new, age‐integrated social system approach to an ageing society.     

Welfare regime change – or lack of change – in unemployment compensation

Drawing on theoretical accounts of institutional change, this study explored the politics of welfare regime transformation in regard to Turkey's unemployment compensation system. By using the institutionalist approach, the study shows that the process of welfare regime change was one of “institutional layering” of unemployment insurance (UI) over severance pay. Also, the study demonstrates that the economic bureaucracy played a key role in pushing the establishment of UI (state‐centric approach) in contrast to the class‐based organizations that focused their struggles on the severance pay scheme (power‐resource perspective). However, the economic bureaucracy preferred a rudimentary UI design, which prevented UI from undermining the vested interests behind the severance pay scheme. Furthermore, subsequent attempts at the reformation of the severance pay scheme were not successful because the social welfare bureaucracy lacked the capacity to develop a policy alternative to resolve the stalemate between the societal actors. Lastly, the study used the successful severance pay reform experiences of South Korea and Austria to locate the Turkish case within a broader comparative framework.     

Dynamics of the Welfare Mix in the Republic of Korea: An Expenditure Study Between 1990 and 2001

Although non-State sectors have played an important role in people's welfare, their expenditures have usually been excluded from social policy studies when measuring the welfare efforts of a nation. This article experiments with a new approach synthesizing welfare mix research using an expenditure study as a tool and applies the model to the Korean case. It presents the following major findings: first, the welfare system of the Republic of Korea has presented a genuine welfare mix in which the role of non-State sectors has been of immense importance; and second, the dynamics of the welfare mix since 1997 have been largely due to the growing role of the State in social welfare, both directly and indirectly. Based on these findings, this article ultimately urges the necessity of the welfare mix approach in comparative social policy research.