Social Welfare in Korea. Young Jun Choi Dept. of Public Administration Korea University

Transcription

1 Social Welfare in Korea Young Jun Choi Dept. of Public Administration Korea University

2 Contents Introduction Characteristics of social welfare in Korea Socio-economic changes Welfare developments Cases of pension and unemployment benefits

3 Korea as Confucian welfare states? Confucianism Beyond the wife-husband relationship Married women Seniority Eldest son From Catherine Jones (1990, 1993) to Rieger and Leibfried (2003) Underdeveloped formal systems of social security Low levels of government investment in social policy Fundamental importance of the family, e.g. filial piety, and community-based social safety-nets

4 Korea as Confucian welfare states? Criticism Panacea? Buddhism or Christianity Cannot capture recent dynamic social changes and social policy development Rather, exploited by politicians as a political rhetoric (Walker and Wong 2005)

5 Developmental regimes: context One-party domination: LDP- Japan, RP-DJP in Korea, KMT in Taiwan, China, Singapore Authoritarian developmental states Bureaucratic autonomy (in key economic sectors) Highly restricted democratic movements State-exercised financial control over the economy

6 Developmental regimes: context State-led and export-oriented growth Favoured government treatment to private sector organisations, Such as trading companies and industrial conglomerates High debt-equity ratio in Japan (342% in 1982) and Korea (385.8%) whereas very low in Taiwan (78.1%) : policy loans vs. tax policy Favourable international environments for exportoriented policy with protective domestic market, particularly provided by the United States

7 Developmental regimes: context Full employment labour market Life-long/full-time employment practice Strong male-breadwinner model Seniority rule of promotion Three-generation family Demographic structure Young demographic structure Decreasing but still stable fertility rate

8 Developmental/ Productivist welfare regimes Developmental welfare states (Tang 2000, Kwon 2005), Productivist welfare regimes (Holliday 2000, 2005, Gough 2004) Fourth welfare regimes added to The Three Worlds of Welfare Capitalism Strategic use of social policy as a means of state-led industrialization Low levels of taxation and social expenditure Small public welfare bureaucracies Governmental hostility to the idea of the redistributive function of welfare state Subordination of all aspects of social policy to economic objectives

9 Still Deveopmental/Productivist regimes? Welfare development not shaped by economic reasons but by satisfying social needs since the 1990s: 1) long-term care insurance in Japan/Korea/Taiwan, 2) pension/ heath/unemployment insurance and new public assistance in Korea and Taiwan Independent from economic policy Productivist nature and workfare-style welfare programs: Any difference with liberal welfare-state regimes or welfare retrenchment in Europe? From development states to post-developmental states

10 Post-developmental regimes Declining the developmental states Democratisation International pressure: open your economy and fix unfair trade practices Growth of conglomerates: tensions with governments Difference between Korea and Taiwan

11 Post-developmental regimes Political democracy Economic recession and crisis End of full employment (life-long) labour market with post-industrialisation Rapid demographic change Diminishing role of family and enterprises in welfare provision

12 Rapid ageing in Korea (Choi 2006) 12

13 Ageing ratio Demographic Change Dependency Ratio Taiwan Korea HongKong Japan US UK China Year Source: NSO (2004), Moon (2005), UN (2005)

14 Total fertility rates (source: OECD) France Germany Japan Korea Sweden United Kingdom United States OECD average China

15 Old-age support (ages 60 or over) by family in Korea (unit: per cent) * 2008: co-residence rate 28.6% Live together with children? Supporting costs? Yes No Family support Self-support 1984/ * * Source: Kim and Choe (1992), NSO (2004)

16 Change of employment by income groups (93-04)

17 Temporary employment (% of wage employment), Self-employment (% of total laborforce (OECD 2012) Germany Italy Japan Korea Netherlan d Spain Sweden UK OECD Average Germany Italy Japan Korea Netherland Spain Sweden UK US

18 Old-age income poverty rates

19 GDP 대비공공복지 Total Social Spending, % of GDP (2007) Source: OECD, OECD, Social Expenditure Database. OECD

20 Changes in social expenditure

21 Social Policy developments 4+1 Social Insurances Work Injury Insurance Health Insurance National Pension + Basic old-age pension Employment Insurance Long-term care insurance Public Assistance + Activation policies Social services Childcare services Care for the elderly and the disabled

22 Structure of Korean Public Pensions Source from slide 8 to 13: Hosun Yoo (NPRC, 2013) 22

23 Brief History of the National Pension 1987 : legislation 1988 : enforcement of the scheme (workplaces with 10 workers or more) 1992 : expanded to the workplaces with 5 workers or more 1995 : expanded to rural areas 1999 : expanded to urban areas Pensionable age from 60 to 65 ( ), Income Replacement rate from 70% to 60% (full coverage to labor force aged between 18 and 59 by law) 2007 : Introduction of non-contributory Basic Old Age Pension (tax-based and means tested, 70% of the elderly aged 65 and over, 5% of the 3-year average earnings of the insured of the NP) Earnings replacement rate : 60% 40% (2008~2028) 23

24 Vulnerable People in the National Pension - Coverage of Public Pension The insured of public pension Current contributors of public pension The insured of public pension Current contributors of public pension Working age Labor force % 90.6% Working age Labor force % 64.2% Working age Labor force % 95.7% Working age Labor force % 67.7% Sources: IMF OAP/FAD Conference (Seong Sook Kim, 2013) 24

25 Vulnerable People in the National Pension - Beneficiaries of Public Income Security for the Elderly (unit : thousand persons, %) Total Basic Old Age Recipients of population of Pension (BOAP) the National Pension (NP) and/or Non-beneficiaries aged 65 and over Recipients Public Occupational Pensions (POP) 5,701 (100%) 3,796 (66.6%) 1,799 (31.6%) only BOAP 2,889 (50.7%), NP+BOAP 907 (15.9%), only NP or POP 892 (15.7%) <Total = 4,688 (82.2%)> 1,013 (17.8%) Sources: IMF OAP/FAD Conference (Seong Sook Kim, 2013) ; Residents registration statistics, National statistical Office (Dec. 2011); National Pension and Basic Old Age Pension Data base (Dec. 2011); Government employees Pension Scheme (Dec. 2010); Private School Pension Scheme (June 2010); Military Personnel Pension Scheme (Dec. 2011). 25

26 Vulnerable People in the National Pension - Groups Exempted from Paying Causes of exemption from paying contributions (June. 2011) Total (%) Unemployed Suspension from office Cease of business Hospitalization over 3 months National disaster Economic difficulties In jail Missing Schooling etc

27 Vulnerable People in the National Pension - Groups not Paying contributions Rates of contributions collections (Mar, 2010) (Unit: billion won, %) Total Workplaces The insured in regions Voluntary (+Continuously) Total Urban Rural (%) 27

28 Why Employment Insurance? Protecting the unemployed End of full employment & life-long employment labour market Promote employability, reemployment, and job retention Active labour market policies Gender equality 28

29 Employment & unemployment rates (MOEL, 2012) 29

30 30

31 History of Employment Insurance (Kil-sang Yoo, 2011) 31

32 Requirements and benefits (MOEL 2012) 32

33 Premium rates (MOEL 2012) 33

34 Trends in insured workers and actual coverage of EI (1996~2010) (Hwang 2011) 12,000 10,000 8,000 6,000 4,000 2, ,000 pers ons % 70% 60% 50% 40% 30% 20% 10% 0% Number of the ins ured Propotion of the insured 34

35 Actual coverage by groups (Hwang 2011) 35

36 Trends in the category of EI recipients and share to the total UB recipients (1997~2010) (Hwang 2011) Total Job-seeking benefit Early reemployment benefit Illness and injury benefit Others Number Percent Number Percent Number Percent Number Percent Number Percent , , , , , , , , , , , , ,306, ,243, , , , , , , , , , , , ,985 1,299,567 1,236, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

37 Trends in new benefit recipients and its proportion to total insured separators (Hwang 2011) 30% 25% 20% 15% 10% 5% 0% 1,000 persons ,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Propotion of benefit recipients to separators New benefit recipients Separators 37

38 Distribution of reasons of not receiving UB by employment status (Unit: %) (Hwang 2011) Not receiving benefits Not insured No sufficient contribution Cause of separation Others Exhaustion of benefits Receiving benefits Total Permanent Temporary Daily

39 Issues and challenges: pensions Strengthening old-age security against high old-age poverty: Expanding tax-based Basic Pension but how? Providing pension contribution subsidies for low-income workers Improving the level of pension benefits? Improving the sustainability: Increasing contribution rates whereas decreasing the benefit level? Higher fertility and higher employment rates Stronger economic performances New multi-pillar (tier) system? 39

40 Issues and challenges: EI Enhancing the effectiveness of EI: Expanding the coverage: contribution subsidies for low-income workers, longer duration of benefits? Activation policies for low-income workers: Employment Success Package plus unemployment assistance for low (un) skilled workers Strengthening active labor market policies Effects of unemployment benefits: Inconsistent results so far 40