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The National Assembly Futures Institute publishes reports that predict and analyze the changes in the future environment based on a comprehensive perspective, and derive mid- to long-term national development strategies in consideration of the preferences of the citizens
(22-06 Research Report) The Welfare System in the Age of Low Growth without Employment and the Advent of a Super-Aged Society

Date : 2022-12-31 item : 22-06 Research Report P.I : Lee Chae-jeong

(22-06 Research Report) The Welfare System in the Age of Low Growth without  Employment and the Advent of a Super-Aged Society

Now is the time to discuss a sustainable welfare system an economy in continued low growth without increased employment that meets the needs of an emerging super-aged society. This study examines how the welfare system is changing through the lens of international comparison, and examines the case of Korea specifically, to derive policy implications for the design of a welfare system that can flexibly respond to an era of low growth without employment and a society that is super-aged.

From 1990 until recently, changes in the welfare system have been analyzed using country-specific statistics provided by the OECD. As a result, OECD countries are seeking changes in their methods of financing and distributing social expenditures in response to the deterioration of government fiscal soundness and the increasing demand for social benefits. OECD member countries have shown a tendency to decrease the share of social security contributions from tax sources. The proportion of social expenditures for cash benefits for the elderly has increased, as has the share of in-kind policy support for families.

The United Kingdom, France, and Finland were examined to investigate changes in the welfare system by type of welfare state. In the UK, the average share of social security contributions has been maintained at 20–30%, while the share of personal income tax, value added tax, and capital gains tax has increased. Finland’s welfare resources consist of national and local taxes, employment funds, and pension contributions. In France, social security contributions have gradually decreased, and the share of general social contributions has gradually increased. As low growth without employment has continued, the French government has recognized the limitations of the existing social insurance method and has sought a diversification of tax sources.

This study examined the major policy areas of Korean society: the labor market, income security, health care, and housing. Amid low growth without employment, the labor market needs income security and employment promotion policies, and it is necessary to improve the combination of active labor market policies by considering the effect on employment rate by policy type. It is necessary to continuously invest resources into income security due to the increase in the number of recipients of such policies brought on by a super-aging society. In the health and medical fields, it is necessary to reorganize the health care system in consideration of demographic changes due to low birth rates and an aging population, the emergence of new infectious diseases, and the sustainability of the health insurance system. Regarding housing policy, it is necessary to ensure a continuous supply of public rental housing, expand housing benefits, support suitable housing options for various income and asset levels, and utilize and improve old and vacant houses.

Korea’s existing welfare policy was not composed of one package; recent attempts to expand the social safety net have also been carried out by sector, and efforts for systemic transformation are sound. Systemic transition beyond sectoral policies is possible through national consensus and social deliberation on what kind of welfare state Korea will pursue beyond an analysis of the current system.