Financial Crisis and Social Security: The Paradox of the Republic of Korea

Abstract

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.

Explaining Welfare State Adaptation in East Asia: The Cases of Japan, Korea and Taiwan

“…Taken together, total social expenditures rose dramatically by nearly doubling the fijigures between 1996 and 1999 ( Figure 2). However, contrary to the claim that these measures ran counter to neoliberal forces (e.g., Shin, 2000;Kwon, 2002), Korea's response had been consistent with the need of an increasingly liberalised labour market. Both the reformed employment insurance provision with an extended coverage and a new social assistance provision with the abolition of its 'demographic' criteria continued to present strong work ethics.…”

The Mechanism of Income Redistribution: The Case of South Korea

“…This overall change in the mechanisms of income distribution might have resulted from a series of social security reforms that took place after the financial crisis (see Kwon, 2001Kwon, , 2002Shin, 2000). Although Table 2 does not show the detailed profile of each social security system, this change might have been affected most by the reform of public assistance which greatly relaxed its 'strict less-eligibility' criteria.…”

Globalization and Poverty in east Asia

“…The crisis brought a second wave of reform in 1998-99 in which the government restructured the medical insurance scheme, expanded liberalized pension entitlements as well as labor standards, and established a tripartite "labor-management-government' committee (Shin, 2000). In Korea, unemployment soared with falling labor demand despite real wage cuts.…”