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Politics of social policy in Korea

Politics of social policy in Korea. Why is inequality becoming a bigger concern? What effects did the democratization and the financial crisis have on social policy in Korea? Is welfare politics becoming salient? What’s the prospects of welfare politics?

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Politics of social policy in Korea

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  1. Politics of social policy in Korea • Why is inequality becoming a bigger concern? • What effects did the democratization and the financial crisis have on social policy in Korea? • Is welfare politics becoming salient? What’s the prospects of welfare politics? • Will Korea develop toward a social democratic, conservative, or liberal welfare state?

  2. Varieties of welfare capitalism David Soskice: liberal vs. coordinated market economies Gøsta Esping-Andersen: liberal, social democratic, conservative welfare states • LMEs: the USA, Britain, Australia, Canada, New Zealand, Ireland • CMEs: Germany, Switzerland, the Netherlands, Belgium, Austria; Sweden, Norway, Denmark, Finland; Japan

  3. Labor market institutions and welfare states, early 2000s

  4. Redistributive impact of welfare states • Inequality and redistribution among working-age households, late 1990s Mkt Gini Disposable Redistribution Nordic SMEs 35.2 23.6 32.9% Continental SMEs 34.8 25.6 25.7% LMEs 41.8 32.4 22.6% (US) (43.6) (36.3) (16.7%)

  5. Universal vs. Selective Programs • Universal programs: “How shall we solve our common problem (health care, education, pensions, etc.)?” • Selective programs: “How shall we solve their problem?” -Stigmatization (“the undeserving poor”) Means-testing (whether and how much to support): suspicion and arbitrariness, cheating and corruption, costly administration  undermines public support Means-tested (targeted) assistance is not more redistributive. Why?

  6. Redistributive effect of the universal welfare state

  7. Korea: Historical Breakdown • Pre Democratic Period • Welfare Developmentalism • Post Democratic Period • Expanding the social contract • Post Financial Crisis Period • End of Welfare Developmentalism? • New Welfare Politics - Universal or selective welfare programs?

  8. Pre-1987 • Welfare Developmentalism • Primacy of Economic growth • Key sectors first to receive limited social insurance: *Public pension system: Government employees(1960), military personnel(1963), private school teachers(1975) • Limited gov’t fiscal commitment: “regulator” • Expanding investments in education • Low inequality - Not because of social policy - Land reform, Korean War - Labor-intensive industrialization with full employment

  9. Post-1987 • Coverage for all citizens: Health insurance • Direct gov’t fiscal commitments • Health care contributions to farmers, self-employed (1990) • National Pension Scheme: private sector employees in companies with 10 or more employees (1988), companies with 5 or more employees (1992), farmers and fishermen (1995) • Modest Unemployment Insurance (1992)

  10. The Impact of the 1997 Financial Crisis • Rising unemployment • Declining full-time, regular employment • Growing inequality • Also, rapid population aging

  11. Poverty Rate and Widening gap in income in Korea

  12. Post-financial crisis: Rapid expansion, but still small welfare state • Fiscal strains but no rolling back • National health care program in the red • Pension system faces long-term insolubility: *Partial privatization not adopted • “social right to decent living for every citizen”: - Minimum Living Standard Guarantee Act (2000) • Greater long-term fiscal commitments

  13. Growth of welfare expenditure in the total government spending

  14. Social Expenditure, selected OECD countries(% of GDP) Source: Adema and Ladaique (2005), p.72

  15. The Basic Goal of the “Vision 2030” 10 thousand dollars/capita Norway 2030 Swiss USA Denmark England Sweden • 2020 Japan Germany • OECD Average Greece Korea Mexico Poland • Public social expenditure/GDP

  16. Source: OECD ECONOMIC SURVEY OF KOREA (2008)

  17. The Size of “the Blind Spot”* of Social Insurance System

  18. Why small welfare state in KOR? Kim, Young-soon: • Institutions of interest representation: • Social dialogue

  19. Why small welfare state in KOR? Kim, Young-soon: Institutions of interest representation: • Political party w/o policy: Policy making by the bureaucracy, with civil society input • Why? Single-term presidency, regionalism, lack of class cleavage, anti-communism & narrow ideological spectrum, ideological politics developed surrounding North Korea policy • Social dialogue -Tripartite Agreement (2/6/98) -KCTU’s withdrawal & company unionism: Low coordination & centralization

  20. Yang, Jae-jin (2004), Democratic governance & bureaucratic politics • Dominance of economic bureaucrats→ social bureaucrats • Increasing role of civil society organizations • Formation of pro-welfare policy network • Still, bureaucratic politics over party politics

  21. New era of welfare politics? • 2010 local elections: Free school lunch as a defining issue • DP’s new platform: Universal welfare state, debate on wealth tax • GNP’s response: Selective vs. near-universal welfare programs, debate on tax cuts Why? • Increasing economic polarization • Role of DLP & progressive educational superintendents • Prospects? • Institutionalization of party system?

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