This study analyzed the characteristics, structure, origin, and evolution of the Korean welfare system, focusing on its relationship with the production system, and evaluated strategic alternatives for a sustainable welfare system.
First, we confirmed that Korea's welfare system is a subsystem of the production system, as it supports economic growth during early development. In addition to its low burden and low social benefits, the welfare system in Korea is characterized by an increase in the tax revenue, which is centered on social insurance and offers a dual-structured public and private security system. Since 1987, the Korean welfare system can be best understood through the concept of 'reverse selectivism.' This concept describes the reality that institutionalized welfare policies in response to individual risks, such as unemployment, disease, and aging, are concentrated on those social groups with a relatively stable employment and income. As for public social security, Korea's public welfare system developed as its social insurance expanded following the IMF financial crisis. However, the system was limited to wage workers who were in a relatively stable employment situation and who paid social insurance premiums. Further, the private security system is implemented through private insurance or housing assets, and both the taxes and financial system in Korea are designed in favor of those who can accumulate private assets. Therefore, it can be said that the private welfare system is primarily available to those in higher income brackets.
In short, the reverse selectivity of the Korean welfare system is not just a matter of public welfare, but a combination of private asset accumulation, economic growth model development, labor market trends, and a low taxation system. Korea's production and welfare systems faced a structural transition period following the IMF financial crisis, which has strengthened the contradictions of the Korean welfare system that originated during the industrialization period.
Based on the production and welfare systems of Korea, we derived strategic alternatives for a sustainable welfare system in response to the changes in the socioeconomic system. These alternatives consist of methods which assume that the current production system does not change, and which induce the transition of the production system through the welfare system. We prefer the second strategy, which is designed as follows: First, the public social security system, which was developed to alleviate social risks, should be converted from a system based on employment relations to an income-based system. Second, for groups who do not engage in income-generating activities, an additional income security system is required to support them to earn a basic living. Finally, in order for the new welfare system to contribute to the innovation of the production system, it is important to improve and restructure the system for companies and to upgrade human capital.
> Future Research > Future Reports > Research Reports