This paper seeks to answer the questions why and how the social security system in the Republic of Korea has expanded in the wake of the financial crisis. The author first reviews the characteristics of the Korean welfare system before turning to the social effects of the financial crisis, then examining the resultant changes to the social security system and highlighting the driving forces behind them. The paper argues that the development of the system can be mainly attributed to the change of policy networks from a symbiotic alliance between the State and business to a tripartite corporatism and growing social demands for social welfare.
This article argues that changes in the role of the state in economic affairs will affect the process of social policy. Growing economic integration caused by globalisation now places a greater constraint upon the discretion of the nation state, bringing about a transformation into a more competitive state. States are increasingly having to compete against each other in order to promote competitiveness and attract foreign direct investment (FDI) from international capital markets. This competition influences in turn the social policy formation requiring the redesigning of social policy. Thus, welfare states may need to reform their social policy towards a “business‐friendly social policy”. The analysis of social policy inputs and outputs presented here suggests that there are common trends in most welfare states towards: a market‐conforming policy on business taxation, a reduction of the share of employer's contributions in social protection revenues, more limited income security programmes, an increased allocation of resources for active labour market programmes and less state intervention in the labour market. All these reforming trends in social policy can be understood as a response of welfare states to the evolving needs of business caused by structural change, notably globalisation.
Since the 1997 economic crisis, the Republic of Korea has seen considerable progress in its social security system along with relatively high economic growth. The social security system has been reformed to become more redistributive and comprehensive. Nevertheless, the country has experienced growing income inequality and poverty, raising future concerns about the sustainable growth of the national economy. The deterioration in welfare outcomes can be explained as a result of socioeconomic structural changes, including globalization, post-industrialization and an ageing society. Another important reason is that the social security system has not effectively addressed increasing income inequality reflecting the dualism of the labour market: there are many irregular and self-employed workers who are not covered by social security programmes. With the social security system faced with institutional difficulties in coping with increasing social risks driven by the impacts of socioeconomic and structural changes, reform is necessary to enhance social cohesion against growing labour market inequality. There is a need for "Dynamic Social Security" to provide an institutional foundation which supports the virtuous circular relationship between economic growth and distribution.
In this study, we propose a group-based trajectory analysis to examine why and how people fall into and out of poverty despite spiralling public expenditure on anti-poverty policies. By analyzing the poverty experiences of 1,001 low-income households between 1999 and 2008 in Korea, we identify five groups based on their poverty trajectories: exiting, declining, slowly rising, rapidly rising and chronic. Household members in each group demonstrate heterogeneous labour market experiences, educational levels and demographic factors. The exiting group has a high proportion of full-time workers, high school graduates, and younger and male-headed households, whereas the chronic group has more part-time workers, high school dropouts, and older and female-headed households. Among the declining, slowly rising and rapidly rising groups, educational background, age and sex are factors that differentiate the poverty dynamics of household members. Lastly, a number of social policies for helping low-income households to leave and stay out of poverty are proposed.
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