The welfare state in Korea (also known as South Korea or the Republic of Korea) has evolved over the past 40 years from a bare structure, with a minimal number of programmes, into a fairly comprehensive system. During this time, Korea has acquired distinctive social policy characteristics. One of the important rationales for social policy in the East Asian region was ‘welfare developmentalism’, which saw social policy as an instrument for economic development. Based on such a policy rationale, Korea’s social policy can be summarized as the developmental welfare state (Kwon, 2005). In fact, social policy did indeed prove to be one of the most effective policy instruments during the period of rapid economic growth in Korea (Goodman and White, 1998). There were also downsides to welfare developmentalism. The welfare state protected first the selected group of people who were working at the strategic industries for economic development, leaving vulnerable sections of society outside the system. This resulted in the situation that the welfare state, particularly the pension and health-care systems, reinforced social inequality. This social policy paradigm was allowed to be implemented in practice by the authoritarian politics that spanned from the 1960s to the early 1990s (Kwon, 1999).Second, the equally important policy dynamic shaping the Korean welfare state was the democratization that took place from the mid-1980s. The dynamic between democratization and the development of the welfare state in Korea has been much more complex than the way in which Marshall once described it, as the development of political and social rights (Marshall, 1964). At times, social policy programmes were introduced or extended to fend off democratization pressures on authoritarian governments, while other programmes were the spoils of democratic political struggles. Korean politics has now successfully shifted to a democratic form; the fragmented social policy programmes such as National Health Insurance were reformed and risk pooling was extended in favour of people who were more risk-prone (Lee, 1997). This development of the welfare state can be described as a move from a ‘selective’ to an ‘inclusive’ welfare state (Kwon, 2005). The culmination of this transition was welfare reform by the Kim Dae-jung government in the wake of the East Asian economic crisis of 1997–8. The third dimension often identified as a core feature of the Korean welfare state is the notion of Confucian familism, involving ‘a strong reliance on the family as the site of social welfare and service delivery’ (Goodman and Peng, 1996, p. 193). Social arrangements were based on the assumption of the family as the main provider of care. The traditional image of the family was of a unit composed of three generations, where household work, including homemaking and care-giving, was undertaken by ‘housewives’. This ideal-typical family has become a marginal form of family in reality, but the underlying assumption of care responsibility remains based on such a family form. Rapid ageing, and changes in family structure also put strain on the structure of the welfare state in Korea, undermining the traditional rationale of developmentalism and familism. A clear sign of this is that Korea has the lowest fertility rate at 1.13, according to the National Statistics Office in 2007. It can be interpreted as women’s response to the Korean welfare regime.We will first discuss welfare reform after the East Asia economic crisis in 1997–8, a move towards further inclusion incorporating the concept of social rights while maintaining its developmental credentials. Second, we discuss policy issues that emerged after the reform, arguing that it is necessary to ‘rescale’ the welfare state in order to make it socially inclusive while maintaining its sustainability. Before proceeding, it will be useful to set out the historical development of the Korean welfare state in five stages, explaining the overall structure of social policy programmes. The formation of the developmental welfare state — The first social welfare programme was Industrial Accident Insurance in 1963, along with a pilot programme for health insurance effected by the military government which took power after a coup d’¨¦tat in 1961 (Kwon, 1999). It was considered necessary as Korea embarked on an ambitious economic development plan. At the beginning, Industrial Accident Insurance covered people in workplaces of 500 employees or more. In 1962, the government made the existing Civil Service Pension Programme more generous, to mobilize the bureaucracy for economic development.The expansion of the developmental welfare state — In 1973, the National Pension Programme (NPP) was first considered as an effective measure for increasing domestic savings: capital could be used for industrialization. It was, however, postponed due to the sudden oil price rise and subsequent inflation. In 1977, National Health Insurance (NHI) was introduced for workers in enterprises that employed more than 500: a separate health fund for the civil servants was introduced in 1979.Democratization and the welfare state — The sudden death of President Park followed by another military man at the helm of power led to a decade-long democratization movement. Political efforts to make the fragmented NHI a universal programme were frustrated by the authoritarian government, but social grievances emerged at the centre of political debates. In the wake of the first democratic election for the presidency in 1987, the government extended NHI to those previously excluded, making it a universal programme. In 1988 the government reintroduced the NPP in the same format as the 1972 proposal. In 1993, the Employment Insurance Programme (EIP) was introduced as Korea prepared to join the OECD.Reform of the developmental welfare state — In the wake of the East Asian economic crisis, the Kim Dae-jung government strengthened and extended the welfare state in terms of benefits and coverage. The EIP was extended to all workplaces in 1998, although not strictly enforced. The Minimum Living Standard Guarantee was introduced based on the idea of social rights in 2000, replacing the stringently means-tested public assistance programme. In the same year all separated health funds under NHI were integrated, paving the way for a financially and administratively integrated programme. Civil society groups played active roles in strengthening those programmes.Rescaling the developmental welfare state — Concerned about financial sustainability, the government began to initiate reforms of the NPP, the Civil Service Pension Programme and NHI, while strengthening social service programmes. In 2007, the National Assembly passed the bill that would reduce the level of pensions, while it explored various methods to reduce the cost of NHI. A new programme, Long-Term Care Insurance for the Elderly, was introduced in 2008. Underlying such moves are rapid demographic ageing rates and a very low fertility rate at 1.13.
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