Performance of Korean Welfare System
in the DJ Administration
Kyo-seong Kim (Ph.D.)
Chung Ang University
Introduction
1. Background
• Areas of social welfare policy have experienced
sweeping changes under the DJ Administration.
• In general, this welfare reform have received positive
evaluations.
• The welfare reform under the DJ Administration should be evaluated as
astonishing as welfare innovations achieved in the UK in the latter period
of the Second World War and in the US during the Great Depression
(Sung, 2001).
• If the welfare reform is continued, Korea could be the first country to start
from an underdeveloped country after the Second World War and enters
the welfare state (Kim, 2005).
Introduction
2. Major Purpose
1. Examine contents of welfare reform under the DJ
Administration.
2. Analyze efforts for expansion of state welfare and
results based on two dimensions of time and space.
3. Evaluate DJ Administration’s welfare reform.
Methods
Social Welfare
Coverage
Expenditure
Benefit level
Examine
contents of
welfare reform
Compare before & after
Compare Korea with other
Advanced Countries
Poverty
Rates
Gini
Coefficients
Cluster
Analysis
Analyze
Efforts &
Results
Evaluate
welfare reform
Welfare Reform in the DJ Administration
1. Coverage Expansion
(1) Expansion of National Pension Scheme (NPS) to the
entire population.
(2) Expansion of Employment Insurance (EI) and
Workmen's Accident Compensation Insurance (WACI)
to all work places with less than one employee.
2. Extension of Benefit Level
(1) Extension of unemployment benefit period.
(2) Increasing the amount of benefit in EI & WACI.
(3) Reduction of replacement ratio in NPS.
Welfare Reform in the DJ Administration
3. Enactment of National Basic Livelihood Security Act
(1) Revocation of demographic criterion in the eligibility
test.
(2) Introduction of conditional recipients based on the
idea of workfare.
(3) Extension of benefit level.
Government Budget in % of General Account
12
10
8
6
4
2
0
1992
1993
1994
1995
1996
Social security
Source : Ministry of Health & Welfare (www.mohw.go.kr)
1997
1998
1999
2000
Ministry of Health & Welfare
2001
2002
Social Expenditure in % of GDP
35
30
25
20
15
10
5
0
1980
1982
1984
1986
SD
1988
Cor
1990
Lib
1992
Korea
1994
Mexico
Source : OECD (2004) Social Expenditure Database, 1980-2001 (www.oecd.org)
1996
Turkey
1998
2000
Social Expenditure by Major Policies
12
10
8
6
4
2
0
1987
1992
1996
1997
Social Insurance
1998
1999
Public Assistance
Source : Ministry of Health & Welfare (www.mohw.go.kr)
2000
2001
Social Service
2002
Coverage Expansion
Source : ILO (1992) International Labour Conventions & Recommendations, 1919-1991
(Recommendations 102, 103, 128, 130, 134, 168, 176)
Data : Korean National Statistics Office (NSO), Corporations of Social Insurance
Notes : E : Employee, EAP : Economically Active Population
Poverty Rates
11
10
9
8
7
6
1996
1997
1998
1999
Pre-transfer Income
2000
Post-transfer Income
Data : NSO (1996-2002) Income & Expenditure Survey of Urban Households
Notes : Setting the poverty line at 50% of median income.
2001
2002
Gini Coefficients
0.35
0.33
0.31
0.29
0.27
0.25
1996
1997
1998
1999
Pre-transfer Income
2000
2001
Post-transfer Income
Data : NSO (1996-2002) Income & Expenditure Survey of Urban Households
2002
Effects of Tax & Transfer in Reducing Poverty
30
20
10
AUS
CAN
FIN
FRA
GER
ITA
JAN
Poverty Rate, Disposable Income
NED
NOR
SWE
UKG
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
2000
1990
0
USA
Effects of Tax & Transfer
Source : Föster & D'Ercole (2005) Income Distribution and Poverty in OECD Countries in the Second Half
of the 1990s (www.oecd.org)
Clustering
1995
2003
Method : Cluster analysis with z-scores of social expenditure(%), maturation of social insurance(year), relative
poverty rate(%), gini coefficient, using the method of ward linkage, squared euclidean distance.
Conclusion
Findings
• Efforts and results for expansion of state welfare are
worth recognizing in some degree.
• However, the level of state welfare is still lagging behind
compared with those of advanced countries.
Discussions
• More radical changes such as enactment of family
allowance and sickness allowance are needed.
• More development in social service area is necessary.