Social Welfare System

Author(s): Meesook Kim
Source: Social Indicators Research, Vol. 62/63, The Quality of Life in Korea: Comparative
and Dynamic Perspectives (Apr., 2003), pp. 265-289
Published by: Springer
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ABSTRACT. The social welfare system in Korea has become a public issue
recently. Before the 1997 financial crisis, policy makers as well as the general
public were mainly interested in pursuing economic growth and largely down
playing welfare needs. In the wake of the crisis, however, the demand for welfare
increased significantly, and this in turn has brought changes in the welfare struc
ture, along with an expansion in welfare expenditures. This paper highlights
the features of the Korean welfare system in terms of social insurance, pubic

assistance, and social service. It examines the basic limitations and key issues
surrounding the system. It compares the size of social welfare expenditures in
Korea to other Organization for Economic Cooperation and Development (here
inafter the OECD) countries. In sum, welfare coverage, expenditures, and benefit

levels are among the barriers to surmount especially in these times of high
aspirations toward national unification and globalization.

As in all other civilized societies, a welfare state has been adopted
in Korea as a basic principle of its constitution. Yet, the country
failed to make any significant progress in building a welfare state
for five decades since its independence from Japan in 1945. Faced
with constant threats from the Communist North and the pressing
problem of extreme poverty, policymakers and the general public
remained preoccupied with issues of national security and economic
development. As a result, the responsibility to help the poor and
others in need was left to individual citizens, their family, and the

In November 1997, Korea was stricken with the worst economic
crisis since the end of the Korean War a half century ago. In the wake

of this crisis, social welfare emerged as an important and urgent
policy issue for the first time in its history. Soaring unemployment

and the increasing incidence of poverty and homelessness forced
the government to confront the vitally urgent and overriding chal


Social Indicators Research 62,63: 265-289,2003.

? 2003 Kluwer Academic Publishers. Printed in the Netherlands.

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04 Oct 2016 02:22:11 UTC All use subject to http://about. This paper attempts to offer an overview of Korea's social security system from historical and comparative perspectives. as shown in Table I. It will then compare Korea's social welfare expenditures and programs with those of the Organization for Economic Cooperation and Devel opment countries. however. Unemployment insurance. The social security budget. there are four social insurance components: work injury compensation insurance.118. Finally. In Korea. is the latest social insurance (Lee. 1998). Health insurance has been widely adopted since 1977. introduced in 1964. was replaced by the National Basic Liveli hood Guarantee (hereinafter the Basic Guarantee law). In 1999. public pensions. it will discuss the current problems and future challenges facing the country's welfare system. and social services. There are. or death. II. several tasks remaining to be tackled to achieve a more complete role for social insurance.24. the Livelihood Protection law. to 11. is the oldest among them. it will. and the public pension program was established in 1988. Korea laid the groundwork for its social insurance with its four major compo nents over a short period of time. To this end. and both the pension system and heath insurance were reformed to extend coverage. and the government.1 percent in 1998. enacted in .2 percent in 1995. adopted in 1995. as a percentage of the Gross Domestic Product (hereinafter the GDP). and unemployment insurance. employers. disability. SOCIAL INSURANCE Social insurance is a welfare system that helps the insured to get prepared of times of little or no income. health insurance. This content downloaded from 152. disease. public assistance. Korea's social insurance fund is financed by contribu tions from employees.266 MEESOOKKIM lenge of reorganizing and strengthening its meager welfare system. Work injury compensation insurance.jstor. first examine the structure and programs of social insurance. had increased from 5. old age.10 on Tue.

which develop over time. employees are not required to make contributions to the fund (In. and employees. year 16 million (2000) . MOHW: Ministry of Health and Welfare. occupation-related diseases. 1999). who worked at firms with more than 500 employees.. while treating disease and injury. Now. employees at any workplace with 1 or more workers. the number of beneficiaries was expanded. Kim. 1998). 1998). assembly workers. benefit from the insurance (In. As a result of amendments made This content downloaded from 152.10 on Tue. 1998. I. In addi tion.267 SOCIAL WELFARE SYSTEM TABLE I Types of Social Insurance of Korea. are also covered by the insurance (In. disabled.24. were covered (Chang et al. This social insurance system provides the insured with benefits for treatment of work-caused diseases and injuries. Since the work injury insur ance is being financed exclusively by contributions from employers.50 million Health insurance All people population All people Unemployment insurance Almost all workplaces established workers (2002) Work injury compensation insurance National pension Ministry. and the injured. 1996). Work Injury Insurance Work injury insurance is the older insurance in Korea. and helps in preventing work-related injuries (In.118. 2001 Type Recipients Number of participants MOL* 1964 Over 96% of MOHW* All workplaces 9. stick.jstor. 04 Oct 2016 02:22:11 UTC All use subject to http://about. After the enactment of the Work Injury Compensation Law in 1964.27 million workers 1977 MOHW 1988 MOL 1993 MOL: Ministry of Labor. In 1964. The range of beneficiaries of work injury insurance has been expanded over time. who die in the course of their employment. only miners. or the relatives of those. The government pays for the administrative cost of the system. compensates for income losses. 1998).

1999). Benefits of health insurance consist of both cash payment and in-kind benefits. As of 2000. such as nursing care and transportation costs (The Editing Committee of White Paper on Welfare Reform. 2. In-kind benefits provided by health service centers include: medical consultations. Health Insurance Health insurance is a social security system designed to reduce the financial onus imposed by accident. including rural residents and the urban self-employed. a sickness compens ation pension. Against this backdrop. and to save health care fees. president Chung Hee Park turned his atten tion to developing a social welfare program including health insur ance (Choi et al.jstor. The insurance was further extended in 1992 to cover workplaces with 5 or more employees. and a disability benefit (In. hospitalization. and after the financial crisis..50 million workers at 706231 workplace nationwide (Chang et al. twelve years after its inception.268 MEESOOKKIM to the law in 1972. 1998). the total number of beneficiaries amounted to 9. 1998). drugs and other therapeutic mate rials. Witnessing the need for health insurance. the national health insurance system was adopted in 1977 for firms with more than 500 employees (Choi et al. operations. These benefits are of a case and in-kind nature. At the same time. medical and surgical treatments. the insurance was extended to cover work places with 30 or more workers (Chang et al. the health insurance system was extended to cover everyone.10 on Tue. it was extended to all work places in the country (Change et al. 1999). disease. 1999). It was only during the 1970s that health insurance became a social issue.. the coverage was too minimal to function as a social security system. 1999). while the country was in the throes of economic development. insured persons are required to make co-payments. medical assist ance for the absolute poor was adopted. delivery of a baby. and other services. In addition. To prevent unnecessary utilization of health care services/resources..24. (Chang et al. 1998). there are two special benefits: supplementary benefits for sever disability and for survivors. 1998). Benefit types consist of: sick leave benefits.. when receiving medical care services (The Editing This content downloaded from 152.. by having all participants share in the burden. When the Health Insurance Law was enacted in . In 1989. 04 Oct 2016 02:22:11 UTC All use subject to http://about. or death.

1998). prescription services were separated from dispensing services for the first time in Korean medical history. 1999). There used to be three types of health insurance programs for different target groups: (1) for government employees. National Pension Korea's first pension system was adopted in 1988 with the amendment of the once unworkable.. In 1998. 1998). military servicemen and their dependents. Cash benefits are paid to reimburse for medical care and costs of delivering a baby that are paid by insured persons or by their dependents. ineffective 1973 National Pension Law.24. As the National Pension system was adopted. private school employees.SOCIAL WELFARE SYSTEM 269 Committee of White Paper on Welfare Reform. only government employees (govern ment employees pension). all people. Eight months after the inception of the separation mandate.jstor. military personnel (military personnel pension). and in 1999. all three were incorporated into a single system under the National Health Insurance Act (Chang et al. the centerpiece of public This content downloaded from 152. The National Pension Scheme (hereinafter the NPS). and the government. and (3) for employees of industrial or commercial companies (Choi et al. the patient has to pay 20 percent of the total fee (Choi et al. The health insurance system is financed by contributions from the insured. the National Health Insurance Corporation was confronted with a serious financial imbalance due to the increasing medical insurance fees that medical service centers require. the first and the third health insurance programs were combined into one. 04 Oct 2016 02:22:11 UTC All use subject to http://about. employers. In the year 2000. and private school teachers (private school teachers pension) had . The separation mandate was adopted to prevent overuse/misuse of drugs. Before 1973.118. 3. as well as to reduce drug expenses by suppressing the over prescribing of drugs (The Editing Committee of White Paper on Welfare Reform. The Korean government had to come up with a way of easing the financial burden on medical insurance. A fixed cash benefit is also paid to cover a portion of funeral expenses (Choi et al. became eligible for public pensions. 1998). and the self-employed. As for hospit alization.10 on Tue. including farmers and fishermen. 1998a)... 1998). (2) for rural or urban self-employed individuals..

who are not included in any one of the three insurance plans. 1999). rural dwellers were able to parti cipate in the NPS along with the previously insured urban dwellers.. Pension benefits are provided to insured persons for life. As for the workplace-based group. 1999). disability. Since 1994. As of 1998. is the newest. are not covered by the pension scheme (Chang et al. Since 1991 those employed at businesses with 5 or more workers were included in the pension scheme. NPS participants are divided into two groups: workplace based participants and residential area-based participants. and those aged under 23. 1999). and 2. To provide for financial security of the elderly. In 1999..270 MEESOOKKIM pensions within Korea. It was launched in 1995.27 million workers from This content downloaded from 152. To achieve financial stability in the pension fund.06 million workplace-based participants. Unemployment Insurance. 1999).. but it was reduced to 60 percent when the law was amended (Chang et al. and death. provides the insured with financial security against aging. The target group of the NPS comprises those between the ages of 18 and 60. The purpose of unem ployment insurance is to secure income for workers during times of unemployment. however. voluntarily participate in it. As of 2001. Full-time housewives. and to promote employment through job training and human development. 04 Oct 2016 02:22:11 UTC All use subject to http://about. 9. All workers.. those employed at work places with 5 or less employees. 1999). the urban . and part-time workers were added (Chang et al. the minimum age of pension benefits will be raised from the current 60 to 65 in 2033 (Chang et al. two years after the enactment of the Unemployment Insurance Act (hereinafter the UIA). with the exception of those working part-time.10 on Tue. They can. 4. the minimum period of insurance was reduced from 15 to 10 years (Chang et al.11 million regional participants in the pension scheme (Yoon.118. The average income replacement level used to be 70 percent for those with 40 or more years of participation. there were 5.24.. when the unemployment rate in Korea was fairly low. employees at firms with 10 or more workers are eligible for participation in the NPS. Unemployment Insurance Among the four types of social insurance.jstor. who are not working. are covered by insurance. 1998).

Live lihood aid. Public Assistance In Korea. unemployment benefits. There used to be two types of Basic Guarantee recipients: Home and Institutional Care recipients and Self-support Care recipients. unreasonably narrow selection criteria. 2001). To be eligible for unemployment insurance. During the economic crisis. Self-support Care recipients were those who were able to 271 . self-support aid. including low benefit levels. maternity aid. and medical aid. In 1999. The public assistance system was officially launched in 1961.. maternity aid. and burial aid were provided only to Home Care and Institutional Care recipients (Ministry of Health and Welfare. There are three types of benefits of unemployment insurance: support for employ ment security. and those who were cared for at welfare institutions. the public assistance system used to be called "Livelihood Protection" until the enactment of the National Basic Livelihood Guarantee Law in 1999. and medical aid were provided to both recipient groups. when the Basic guarantee Law took effect. 1999). the Livelihood Protection Act was replaced with the Basic Guar antee law due to the rising demand for public assistance after the economic crisis hit the country.jstor. Included in this group were the elderly. III. 2000). The unemployed can be covered by the insurance for between 2-7 months (NSWC. children. This Law provided the poor with six types of public assistance: livelihood aid. PUBLIC ASSISTANCE 1. educational aid. and other structural problems.24.SOCIAL WELFARE SYSTEM 1208000 workplaces were covered (MOL. Home and Institutional Care recipients were those without the ability to work. but lack sufficient resources for living. the insured is required to have worked at an insured company for at least 6 months. Livelihood aid. burial aid. the This content downloaded from 152. Unemployment benefits amount to 50 percent of the average income before unemployment with a minimum of 250000 won per month and a maximum of 900000 won (Chang et al. 1997). the disabled (demographic eligibility criteria for Home Care). and job training and human development. educational aid.10 on Tue. The Livelihood Protection system is widely criticized because of its several limitations.118. for over 38 years. 04 Oct 2016 02:22:11 UTC All use subject to http://about.

and Korea's social safety net was too weak to protect all of the poor with proper social support. children under 18. or children under 18). they. and (4) enhance the productivity of the welfare system by providing the unemployed with incentives and systematic self-support programs to promote motivation to work (Kim. For example. and hence. it could not handle the drastically increasing poor population.10 on Tue.24. in the sense that it was the first legal mechanism to guarantee a "National Minimum" and self-sufficiency for the poor. and (3) those. The poverty rate increased twice over its pre-crisis level.6 percent in 1997. and 6. to be eligible for the system.118. who have a family per capita income and a household with property with the value below a certain level (in 2000. and with household property valued at 32 million won or less for a family with four members).8 percent in 1998. who are unable to support themselves.jstor. The mass unemployment resulted in many social problems including poverty.272 MEESOOKKIM unemployment rate rose sharply from 2. People who fall under the following categories are eligible for benefits: (1) elderly persons. 04 Oct 2016 02:22:11 UTC All use subject to http://about. and those who are unable to work due to disease or mental and/or physical disability. because Korea's social safety net for poverty had not been fully established. to 6. or who have no household members. This content downloaded from 152. This Law is a pivotal element in Korea's social welfare system. Under these circumstances the Basic Guarantee law was enacted. 2001).3 percent in 1999. Self-support Care recipients and the low-income unemployed were not entitled to livelihood aid. (2) those who have no one to support them. 2001). which the Livelihood Protection system could not provide.1 In other . expectant mothers. the Livelihood Protection system could cover only 60. (3) achieve equity by introducing the concept of Estimated Household Income (household head's monthly income + monthly tariff income).4 percent of the absolute poor before the new poverty law was enacted (Kim. The major goals of the new law are to: (1) enhance people's rights to claim bene fits by renaming the law. family income should be no more than 930000 won. not the lowest class. were the ones who suffered most. who can support them. (2) modernize the institutional framework by abolishing the demographic eligibility criteria (65 or older.

9 28.jstor. entitled to receive livelihood aid. medical aid. the overall benefit level. children under 18) have been lif and anyone. 04 Oct 2016 02:22:11 UTC All use subject to http://about. KIHASA. housing (newly added). per beneficiary has risen. the demogr eligibility criteria (65 and older. Moreover. over million people in poverty were provided with livelihood aid in 2 whereas only 0.24. 2001. .118. the percentage of recipie has risen by 9.1 100 Source: Mee-Gon Kim. Under the new law for the first tim in the Korean welfare system. As for Self-support Care recipients.10 on Tue. when the new law was not yet in effect (see Table (Kim.0 percent. Workshop on Securing Social Safety Nets. Since the adoption of the new law. 77. housing aid is provided. "Basic Livelihood Guarantee System as a So Safety Nets". 2001). suggest that every aspect of living is now protected. 2001). the Korean social safety n has been strengthened. self-support aid. but in 2001 it was increased to 1980 won. educational aid. 2001). In 1997. According to the new law.SOCIAL WELFARE SYSTEM 273 TABLE H Percentage of Livelihood Aid Beneficiaries Classification 1997 1998 1999 2000 Total beneficiaries 1410000 1470000 1920000 1510000 of public assistance (A) Number of persons 370 440000 540000 1510000 covered with livelihood aid (B) B/A*100 26. w were not eligible for the livelihood aid according to the old law percentage has risen by as much as 40.2 29. There are seven types of protection: livelihood aid. The Korean government has markedly increased the budget f basic livelihood aid. This content downloaded from 152. ma nity aid. and burial aid. Owing to the Basic Guarantee Law.5 million people were covered by the same progr in 1999.9 percent (Kim. having increased by as much as 210 percent (Kim. the per capita basic livelihood budget was 639000 won. As for Home Care recipients. who fits the family income and property criteria.

viz. 04 Oct 2016 02:22:11 UTC All use subject to http://about. increased almost twice as much.7 in 1995 (National Statistical Office. Korea became an aging society in 2000 with 7. Thereafter. in 1960 the proportion of the elderly over 65 was only 2. IV. viz. offers medical services with minimal charge. This content downloaded from 152.3 in 2000 (national Statistical Office. Second class medical assistance.118.jstor. 2000b). the medical assistance program was managed separately from the Livelihood Protection law. provides various medical services. reaching 5.5 in 1995. when hospitalized. The total fertility rate has decreased from 4. but after 30 years. 1995). which is provided to people from the second lowest-income class. which is given to those in the lowest-income class.500 won per visit (MOHW. unlike other countries. . in 1990. The government. where medical assistance programs are part and parcel of public assistance. Medical Assistance Medical assistance is provided to those who are eligible for public assistance. There are two kinds of medical assistance depending on the degree of the beneficiary's poverty. Welfare for the Elderly Due both to the low fertility and mortality rates in Korea. to 73. the elderly population is increasing. Due to the increase in the elderly population and the decrease in family responsibility for supporting the elderly. SOCIAL SERVICES 1. however. As shown in Table III. 1995).90 percent.24. including hospitalization or outpatient services free of charge.10 on Tue. and when receiving outpatient services. first class and second class assistance. had to stop providing the assistance due to a lack of funds.13 percent of the elderly over 65.12 percent. Life expectancy at birth has increased from 63..5 in 1970 to 1. they pay 1.274 MEESOOKKIM 2.2 in 1970. recipients pay 20 percent of fees. and to 74. First class medical assistance. when the Livelihood Protection law was enacted. at a time when the family experienced both structural and thus functional changes. The medical assistance system was first adopted in 1961. The system is more closely linked to the health insurance system.. Only in-kind benefits are provided to them. To be eligible for benefits one must be proven to live under the poverty line.

SOCIAL WELFARE SYSTEM 275 TABLE m Elderly Population by Year Year 1960 1970 1980 1990 2000 2001 2025 % 2.jstor. ill health early retirement. According to the new public assistance system. As a result.5 percent of the aged population received public assistance (Suk. This content downloaded from 152. people livin below the poverty line are eligible for public assistance benefits. 04 Oct 2016 02:22:11 UTC All use subject to http://about. Societal involvement is absolutely necessary. as mention earlier. 1996. the life the elderly became harder.1 percent of the elderly aged 65 and older. 1999. and loneliness . health protection and housing.12 7. Public policies for financial security of the elderly include pensions. Governmental policies are mainly geare toward protecting low-income elderly.13 7. There are several types of programs provided by the government for the elderly. 2000). 2000). Even the other pension scheme does not cover much of the ag population. The public assistance system in Korea has been changed from the Live lihood Protection to the Basic Guarantee in 2000. which prov financial security.including financial insecurity.43 14. The Future Estimated Population. public assistance.24. Since its recent implementation the NPS covers only 1. Furthermore after the economic crisis the financial situation of the elderly on worsened.33 Source: National Statistical Office. Most of the elderly lost one or more of their sources o income. unli the other three pension schemes. wh were also struggling with financial difficulties.90 3. Problems that t Korean elderly are facing .10 on . the Militar Personnel Pension in 1963. and old age pensions. elderly care became an important social issue. and were not able to depend upon their adult children. The main public pension program in Korea is the NPS which covers all citizens regardless of their occupations. and the Private School Teachers Pension in 1975.cannot be treated solely within t family. as shown in Table IV (Suk.21 3. Public pensio involve four separate programs: the national pension launched 1988. 7. Public assistance is available to the low-income elderly. the Government Employees Pension in 1960.82 5.118.

24. free health .50 20. while the other amount (MOHW.276 MEESOOKKIM TABLE IV The Elderly Covered by Public Income Security Scheme (1999) Type Public pension Old age Public Total National Government Private Military pension assistance pension employee school personnel pension teachers pension pension % 1. 1999). p. and chronic disease and health care services for the home-ridden elderly (MOHW.84 0.6 7. and the rest were covered by medical assistance (Chung.2 percent are public assistance recipients. An old age allowance is provided to those who public assistance. The benefit level of the old age allowance v different ages and financial situations of the elder between the ages of 65 and 79 receive public amount of 40000 won a month.2 percent of the elderly were covered by the insurance. the low-income elderly receive 30000 won a couple is eligible for public assistance.06 0. As of 2000. 584976 elderly. 2000) 53. those over 80 r a month. serving as a supplemen utory pension. is to protect the aged not particip (Suk. 2000). 150. medical assistance.118. 17.3 per aged population. the elderly need to pay only 20 percent of all hospitaliza This content downloaded from 152. In other words. 96. 04 Oct 2016 02:22:11 UTC All use subject to http://about. With the implementation of National Health Insurance in 1977. 2000b). the benefi age allowance is too low to serve as a social safety n years.jstor. Analysis of Income Sources and Inco Schemes for the Elderly in Korea. 2000). one membe receives only 22500 won a month. With health insurance.13 0.1 Source: Suk.53 23. were covered by it (Suk. 2000.10 on Tue. and th percent are low-income elderly (Suk. 2000b). The recent health care policies for the elderly primarily deal with health insurance. but are not covered by a pension of an old age allowance. treat ment for dementia.

There are three types of home care service in Korea: home help services. Currently. in 1992. 2000b). free nursing homes. To improve the health of the elderly by diagnosing geriatric diseases at an early stage. A further expansion.118.10 on Tue. including diabetes and cataracts.3 percent (280000 persons) of the elderly suffer from dementia. Due to the well-established health security system in Korea. there will be a total of 60 (MOHW. 2000b). the elderly are burdened by high medical costs. The elderly. and the insur ance covers a limited number of them. and built consulting offices for the treatment of dementia nationwide. and short-term care services by which the elderly are protected while away from home for several days (2-3 days or 10-40 days). Since one-third of the elderly are not able to conduct daily living activities without help from other (KIHASA. can live in welfare facilities. 8. 04 Oct 2016 02:22:11 UTC All use subject to http://about.24. Since many of the elderly suffer. at least one additional hospital will be built to treat it (MOHW. 1999). in every city and province. and by the year 2001. 1999). This content downloaded from 152. For the elderly with dementia. In 1999. being escorted to a hospital. the elderly are able to utilize hospitals more often. and this number is expected to increase over time (MOHW. the Korean government has been providing free health examinations to the low-income elderly since 1983.SOCIAL WELFARE SYSTEM 277 tion fees. As of 1999. from more than one chronic disease. and 30-55 percent of all medical fees (Chung. The government established comprehensive long term health and welfare policies. day care services through which the elderly are cared for during the day time. The free health examinations were extended. There was seven types of welfare facility for the elderly in Korea: free elderly homes. to cover various geriatric diseases. such as cancer. who need housing. however. 2000b).jstor. such as helping with eating. occurred in 1996 (Editing Committee of White Paper on Welfare Reform. there were 21 hospitals for the elderly. 15 hospitals that treat dementia are now open. the government has promoted home care services for the elderly with mental and physical disabilities. By 2003. low-cost elderly homes. bathing.33661 elderly received free health examinations (MOHW. including general examinations including blood tests and X-ray examinations to special geriatric . 1998a). 2000b).

the rate of acquired disabil ities was 81.10 on Tue. 04 Oct 2016 02:22:11 UTC All use subject to http://about. all of which are built for the active aging (MOHW. lived in welfare facilities (MOHW. In 1997. will increase due to the rise in nuclear family households and the changing attitude of the elderly towards living arrangements. and nursing homes. It is expected that the number of the elderly. Accordingly.2 percent. and 250000 won a year for heating costs (MOHW.09 percent of the total population (Byun et al. there are 527 elderly schools. and facilities for those with dementia. Welfare for the Disabled There are 1449500 disabled persons as of 2001. to meet such demand. who need housing. who want to live separately from their adult children. is increasing as well. In 1985. the elderly are encour aged to have a vital life through volunteer activities in the fields of traffic control. 2O00b). comprising 3.. the government plans to expand various types of welfare facilities. the Welfare Act for the Elderly was amended to appoint the elderly to serve as community volunteer leaders. is increasing..4 percent in 2000 (Byun et al. whether free or at cost. This content downloaded from 152. 0. 2000c). 6 resort centers. The number of elderly people with resources. In the year 2000. 2000b). 1999). and 118 multi-purpose senior centers. 2. there were 38452 elderly activity centers in 1999 (MOHW. Also. resource conservation.jstor. 2001).4 percent of the elderly (337000 persons). The government of Korea encourages the elderly to participate in volunteer as well as leisure activities for active aging.278 MEESOOKKIM low-cost nursing . 2000b). As for leisure facilities. Post-retirement leisure and social activities are becoming an increasingly important social issue as life expectancy after 65 rises. The government provides each of them with 44000 won a month for managing them. The number of the elderly. and social activities. who have become disabled due to age related diseases. The number of people with a disability at birth is gradually decreasing. protecting 12751 elderly (MOHW. 2001). is increasing at an accelerating rate. there were 229 elderly welfare facilities. general elderly homes.118. but the percentage increased to 89. including car or industrial accidents. In addition. As of 1999. whereas the number of people with a disability after birth. due to various accidents.24.

15 percent of the disabled total. 42000 disabled persons. the rate of the disabled in Korea is much lower than that in developed countries. welfare for the disabled under went dramatic development with the instituting of other measures.SOCIAL WELFARE SYSTEM 279 Still. who have financial difficulties (viz. Policies for the disabled include income support. where more types of disabilities are included. welfare facilities. Welfare for the disabled started in 1981. medical support.10 on Tue. received an allowance of 45000 won per person (Park and Kim. tax and other fee exemptions. class 1 and class 2 types. 2001). when the Welfare Act for the Mentally and Physically Disabled was enacted. which in turn served as a basis for understanding the disabled and living closely with them (Editing Committee of White Paper on Welfare Reform. Basic Liveli hood Aid recipients). 04 Oct 2016 02:22:11 UTC All use subject to http://about. In the year 2000. The main objective of welfare for the disabled in Korea is to achieve their complete social integration by activating their social participation. a technical devices provision. receive disability allowances in addition to livelihood aid. so that they might participate in social activities including work (MOHW. 1998a).118. Those disabled. occupational rehabilitation. Accord ingly. the category of legal disabilities was expanded to include serious. and providing them with equal opportunities (Editing Committee of White Paper on Welfare Reform. when the act was amended and called the "Welfare Act for the Disabled" (Editing Committee of White Paper on Welfare Reform. To This content downloaded from 152. and the providing of easy access to relevant facilities. as well as by creating the necessary social conditions. 1998).25% yearly interest rat. repayment within five-years with a five-year grace period). In 1997.24. From that point on. and in 1989. 1998a). when the Para-Olympic Games were held in Seoul. welfare for the disabled has focused on creating a social environment in which the disabled can mix with other people..jstor. 2001). education support. the govern ment provided loans with a low interest rate (8. In 1999. amounting to 12 million won per household ( . to those who could work. chronic intestinal disorders. This is because the range of disabilities in Korean is far narrower than in other OECD countries.2 who are not capable of working. 1999). The Act further matured in 1988. and mental disabilities (Korea Welfare Committee for the Disabled. 1998b).

118.280 MEESOOKKIM promote the financial independence of the disabled. telephone and television bills. In 1992. the government gives priority approval to the disabled. educational support was extended to school-age students from lower class disabled families. 1999a). This was done to break the cycle of poverty with younger generations of disabled families (MOHW. 2000b). For other disabled individuals. various fees and tax example programs are available. This content downloaded from 152. 04 Oct 2016 02:22:11 UTC All use subject to http://about. The Employment Promotion Act for the Disabled requires companies with over 300 workers to hire disabled persons amounting to not less than 2 percent of their employee pool. health insurance covers about 80 percent of their cost (MOHW.24.jstor. the disabled need to pay only 50 percent of their medical fee due the primary medical service providers. To support the financial independence of the disabled. and vehicle related taxes (MOHW. Junior high and high school students of low income disabled families had their entrance fees and tuition covered. 1998a). 2001). the government runs 150 workplaces and 12 work facilities for them as of the year 2000 (MOHW.54 percent of the employee pool. with more than 300 workers. the low-income disabled can receive a solidly built wristwatch and a TV caption box (MOHW. when they apply for work in retail stores or running vending machines in public facilities. disabled persons employed at businesses within the private sector. 2000). 2001).org/terms . 2000a).10 on Tue. constituted only 0. In addition. and therefore.23 percent (Byun et al. In 1998. In conjunction with this it should be noted that the employment rate for the disabled in the public sector has increased to 1. 2000b). rail road and subways fees.4 and only 20 percent to the secondary or tertiary medical service providers (MOHW. including the exemption of public facility fees. the number of days of medical insurance covering the disabled was extended to one year. the registered3 disabled could receive medical care service throughout the year (Editing Committee of White Paper on Welfare Reform.. and income inheritance. To alleviate the financial burden of the disabled and to support them with income. customs. Disreg arding or not complying with this mandate is subject to a fine. Since 1996. The government provides technical devices free of charge to the low-income disabled.

have been increased since 1997. most welfare policies for the disabled have been geared toward institutionalized disabled persons.24. Source: The Ministry of Health and Welfare: 2000a. that is changing. 04 Oct 2016 02:22:11 UTC All use subject to http://about. such as day care and short-term care services. 2000b). There are two types of welfare facilities for the disabled: welfare centers that provide those living at home with medical treatments. and welfare institutions that provide them with housing and medical .jstor.3 billion Low Income Support Secondary Care: 80% Disabled Education 6894 Entrance fees and Al Support tuition 4 billion Junior Middle and High-school students from low income disabled family 1500 12 million Loan 18 billion Technical Devices1 Low income Household households 3000 Prosthesis and brace 630 thousand Low income Disabled JThe figures of the technical devices are from 1999. 1999a.118.9 billion The Low class Disabled (class 1 and class 2) Medical 93251 Primary care: 50% 9. Until recently. 'Guide to Welfare for the Disabled'. This content downloaded from 152. occupational rehabilitation programs and lifelong education. who constitute only 2 percent of the total number of disabled persons in the country.281 SOCIAL WELFARE SYSTEM TABLE V Social Assistance for the Low-Income Disabled (2000) Item Number of Contents Budget Recipients recipients Income 76899 Support 45000 40.10 on Tue. Various types of home care arrangements. however. Now. Current policies are being made increasingly sens itive to the needs of disabled persons living at home. There are 184 welfare centers and 188 welfare institutions for the disabled in Korea as of 2000 (MOHW.

In 1980.6. post offices.. 1995) (National Statistical Office.a household led by a male without a wife being present or by a female without a husband being present . compared to single female household heads. (a rate calculated on the basis of the number of divorces per 1000 population).10 on Tue. the proportion of this group. First. including government offices.4 percent in 1995 (National Statistical . because there has been continuing social prejudice against a mother being remarried (Kim et al.9%. 04 Oct 2016 02:22:11 UTC All use subject to http://about. divorce or separation. and easier to facilities began to be provided. In recent years. in their 40s. In 1997.282 MEESOOKKIM Since 1991. police stations.24.jstor. in their 40s. father less families constitute most (82. and having children outside of marriage (12. the crude divorce rate. Welfare for the Lone Parent Family A lone parent family is defined as a single parent household . 3. 1998). This content downloaded from 152. The disproportionately large number of fatherless families is trace able to several factors. the "Conveni ence Facility Installation Law for the Disabled. was only 0. Elderly and Pregnant Woman" was enacted.with one or more children under 18 years of age. the government has been making access to a wide range of facilities convenient. is double that of women (National Statistical Office. has decreased from 8. in 1995). that they are less exposed to risks of accidents that may result in death.5%. their lower participa tion is social activities means. the high death rate among men. to the total number of house holds in the country. or abandonment (22.118. brought about a marked increase in the number of fatherless families (National Statistical Office. The death rate of men.8%. The lone parent family group is divided into two subgroups: the fatherless family and the motherless family.9 percent in 1985. The main causes of a lone parent family are death of a spouse 54. 1998a). In addition. Second. The divorce rate is on the rise in Korea. 1998). 1995). to 7. single male household heads have a higher tendency to remarry.1%) of the lone parent families. women have a longer life expectancy than men. This results from the fact that the number of total households including single member households has been increasing at a higher rate. 1998). 1998). Despite the increase in the number of lone parent families. and department stores (Editing Committee of White Paper on Welfare Reform. 2000). In Korea.

and public assistance consists of the Basic Guarantee. as long as they want. when they are unemployed (MOHW. (MOHW.6%.jstor. the government has provided for the reimbursement of educational fees (tuition and entrance fees) for 14989 students. Policies for lone parent families in Korea consist of social insur ance and public assistance. Social insurance includes a pension. While they are receiving job training. and low-income lone parent family protection. 1999b). Whenever lone parents have problems associated with work.118.9 in 1985. an apartment).10 on Tue. 1999b). 1. most social policies are directed toward low income families. most of whom are families without a father (81. the number of low-income lone parent families covered by government protection measures is 68815.24. . but also motherless families are covered by the Act. education fees for junior high and high school. 1999b). and 2. The latest statistics show that the current crude divorce rate in Korea is behind the rate in Great Britain (3. with a low-income interest rate of 8. Not only fatherless families. and has provided child allowances (525 won per day) to 6202 children under 6 years of age. Lone parent families are also eligible to get welfare loans from the govern ment.0 in 1990. 2000b). loans.75 percent (MOHW.5 in 1990. Although there are some policy provisions in place for middle/upper income lone parent families. Bene fits include a child allowance. To ease the financial burden of lone families. Due to the rise in the divorce rate within Korea. the number of lone parent families is expected to increase in the years to come. 1. in 1999) (MOHW. lone parents can receive job training. job training.0). Another service that a lone parent family can receive is counseling. a total of 742 families were living in permanent rental apartments (MOHW. the highest among the OECD countries. Veteran Protection. and medical fees. They are also entitled to rent dwelling units (for example. or children. Low-income lone parent families living above the poverty line are protected under the Fatherless Family Act (enacted in 1989). 1998).0 in 1997 (National Statistical Office. family. 1999b). Lone parent families living below the poverty line are eligible for the Basic Guarantee and medical assistance. As of 1999. This content downloaded from 152. housing. The amount is 12 million won for 5 years. 04 Oct 2016 02:22:11 UTC All use subject to http://about. living expenses are provided for them. Additionally.SOCIAL WELFARE SYSTEM 283 but it increased to 0.

and social services (expenditures from the voluntary sector are excluded) (KIHASA. Social security expenditures. .71 5. Health and Welfare Indicators in Korea. 2000). The continuous increases in social expenditures came from growth in the budgets This content downloaded from 152.47 6. 2000b).63 4.65 1998 11. Professional counselors not only counsel them. was increased in 1997 to 6.284 MEESOOKKIM TABLE VI Social Security Expenditure as a Percentage of GDP (1990-1998) Year 1990 1991 1992 1993 1995 1996 1997 Rate 4.10 on Tue. V WELFARE EXPENDITURES Until the recent economic crisis.65 percent (30 trillion won) (Choi and Ko.23 5.09 percent of the GDP (KIHASA. social welfare benefits in Korea were low.09 Source: Korea Institute for Health and Social Affairs. 436-37. 04 Oct 2016 02:22:11 UTC All use subject to http://about.jstor. as compared to the other OECD countries.28 4. social security expenditures under went a drastic increase to 11. or only 4. In 1998.118. but also provide them with information on child-rearing methods. right after the financial crisis.52 percent of the GDP.52 4. they can visit counseling offices with no charge for the service. in 1990. Note: This is based on OECD Estimation of Social Security Expenditures. public assist ance. pp. 2000). and link them to community resource persons and organizations. a total of 8 trillion won. as a percentage of the GDP.24. As shown in Table VI. was spent for social security. according to the OECD estimate of social security expenditures on social insurance.

the ratio of the social security budget to the GDP was over 14 percent.24. almost three times as high as Korea (Choi and Ko. Social welfare areas that are in need of urgent expansion include public assistance and healthcare. which includes expenditures for health insurance and medical assistance. where the social security expenditures as a percentage of GDP is comparatively lower than other developed countries. Korea's social security expenditures in 1995 were the second lowest (5. This has led to further dissolution of the family and an increase in the number of divorces. however.118. One of these has been the fact that women are increasingly entering the labor force.0%).9%). constituted the largest share (37.7%). social services (3.SOCIAL WELFARE SYSTEM devoted to social assistance and unemployment insurance (Choi and Ko. expendit ures on health and pensions are projected to reach the level of the developed countries (Choi and Ko. Choi and Ko (2000) claim that the This content downloaded from 152. Expenditures on health. Meeting the increasing demand for social welfare would require the Korean government to raise social security expenditures over time in a prudent manner. have still not reached an adequate level. work injuries (3. pensions ( 285 . in comparison to the other OECD countries. All of these factors will make welfare for children. 2000). were lower in every social security category with the exception of work injuries. followed by unem ployment (34.0%) of total social security expenditures. followed by Mexico (3. The underprivileged and the elderly will call for more protection from the government as the country's economy grows.67%). and the increasing demand for social welfare.7%) (Choi and Ko. 04 Oct 2016 02:22:11 UTC All use subject to http://about. 2000).10 on Tue.jstor. Current social security expenditures for Korea. In the near future. Social security expenditures in Korea will inevitably rise due to the ever-accelerating process of population aging. in comparison with some of the OECD countries. The elderly and children are bearing the brunt of the changing social mores that weaken the sense of familial respon sibility. areas whose budget allotments are strikingly insufficient when compared to the other OECD countries. the elderly and family a more important social issue in the years to come.23%) among the OECD countries. Even for some of the OECD countries like Japan and the United States. 2000).7%). and public assistance (2. Korea's social expenditures. 2000).

All of this has called attention to the necessity of strengthening social security and the country's social safety net.jstor.24. To achieve this level would require the Korean government to reserve welfare funds by drawing on the financial resources of both the public and voluntary sectors (Choi and Ko. and its GNP is much lower than that of South Korea. VI. FUTURE CHALLENGES TO THE KOREAN WELFARE SYSTEM Korea has undergone a bewildering array of social changes the aging of the population. Korea was approaching full employment with an unemployment rate of 2. Before the crisis. Thus. Over 90 percent of the elderly in Korea suffer from chronic disease. Also. 1998).118.10 on Tue. and their financial situation is much worse than that of the younger generation (Chung et al. and the high expectation of unification between the two Koreas. 2000). In the event of unification. and Korea will need to establish a social safety net with broad coverage to protect them in the aftermath of the crisis.0 percent. along with the increasing participation of women in the labor force. as a result of trace instances of unemployment in many of the developed coun tries. the 1997 economic crisis with its adverse impacts. Korea is likely to face yet higher unemployment rate with its advancing economy. The economic crisis occasioned an unemployment rate that is still lower than the OECD average. but much higher than the pre-crisis level. Due to the rapid aging of its population.. the buck of protecting the elderly has been passed on to society as a whole. As a result of the diminishing role of the family as an informal elderly care mechanism. social protection for the unemployed will become an increasingly important . Now.286 MEESOOKKIM proper ratio of gross expenditures on social security to the GDP should be 15 percent. 04 Oct 2016 02:22:11 UTC All use subject to http://about. because they are the ones who suffer most from poor health and financial difficulties. Korea should be prepared for raising the living standard of people in North Korea before taking further steps towards unific ation. Korean society will have to meet the welfare and health needs of the elderly. because the poverty level in North Korea is very high. Korea would require a welfare system buttressed by This content downloaded from 152.

and in Australia 82 percent. Meanwhile. S. in Germany 89 percent. a large hospital. 04 Oct 2016 02:22:11 UTC All use subject to http://about.. Change. In sum. Kwon and H. the disabled are categorized into several classes according to the degree of their handicap. H. the Korean welfare system should adopt new strategies to increase budget allocations to enhance programs. Oh: 1999. 1998). This content downloaded from 152.118. 4 In the Koran medical system. Lobour Market and Social Policy: Occasional Papers. Kye: 2000.jstor. Byun. Lee and J. In Canada 112 percent of the absolute poor are covered by social assistance. KIHASA. S.0%. D.6 percent in 2000 (Byun et al. the registration rate was only 62. a medium size hospital.0%.5% as of 1993). 32.24. A 2000 Survey on the Disabled (KIHASA. Lee. and coverage. In-Hyup.SOCIAL WELFARE SYSTEM 287 increased expenditures. W. in New Zealand 92 percent. However. to a tertiary one. 1998. and public sector participation in financing welfare funds needs to be strengthened.5 percent in 1996 (Ademan and Einerhand. Hwang. Germany: 4. No. Social Welfare (Seoul National University. in France 98 percent.10 on Tue. benefit levels. J. 2001). 'The growing role of private social benefits'. the United States: 3. in Finland 112 percent. Suh. and Sweden: . Young-Chan. In addition. and an appropriate combination of social safety measures to protect all the needy people in North Korea. constituting 26. the more serious is their handicap. 3 The disabled should register to get covered by various policies. welfare expenditures need to be increased. and M. 2 In Korea. the private sector should continue to be involved in strengthening the social welfare system through volunteer activities and dona tions. he/she needs to first go to a primary medical service provider or clinic. 2001). if one is sick. Einerhand: 1998. The current contribution rate for the private sector in Korea is much higher than that for the other OECD countries (the United Kingdom: 1. then a secondary one. S. REFERENCES Ademan. Seoul). Kim. in the midst of globalization and torrential social changes. NOTES 1 In developed countries the coverage of the social safety net is much higher. The lower the number of classes.

Ministry of Health and Welfare: 1997. In-Jae: 1998. Health and Welfare Policy Forum 49. Ministry of Health and Welfare and KIHASA: 1999b.. Byun and H. Guide to Welfare for the Disabled.). Lee. B. 'Evaluation on social welfare policies and tasks'.288 MEESOOKKIM Choi. Annual Report on Welfare Facilities for the Elderly. Kyung-Hee (ed. Kim. Seoul). Guide to Welfare for the Disabled Ministry of Health and Welfare: 1999a. Seoul). Presented at the Workshop on Securing Social Safety Nets (KIHASA. Ministry of Health and Welfare: 1999a. Byun. Sun-Jin: 1998 'Welfare for the disabled'. Korea Institute for Health and Social Affairs: 2000. Lee: 1998. pp. Korea Welfare Committee for the Disabled: 1999. Lee. A Survey on Lone Parent Family (Unpublished Paper). Ka-Ok (eds. in Chang-Young Park (eds. Y. Cho. Seoul).): 1999. Y. Annual Report on Welfare Facilities. Choi. Ministry of Health and Welfare: 1990b. White Paper on Health and Welfare. Editing Committee of White Paper on Welfare Reform: 1998a. Kyung-Hee. The Life of Low Class Lone Parent Family and Policy Issues (KIHASA. J. White Paper on Health and Welfare. 04 Oct 2016 02:22:11 UTC All use subject to http://about. Kim and W. Chung. Welfare Reform in Korea Toward the 21st Century: To Enhance the Quality of Life in the Globalization Era (Ministry of Health and Welfare. Current Welfare for the Elderly and Tasks (Nanam Publisher. 1998: The Korea Welfare State: Ideals and Realities (Nanam Publishing Corp. Kwon. Survey on Low Income Lone Parent Family.118. White Paper on Labor. This content downloaded from 152. A National Survey on the Elderly Life and Their Welfare Need (KIHASA). S. S. Estimation of Korean Social Security Expenditures: 1990-1997. 'Basic livelihood guarantee system as a social safety nets'. Editing Committee of White Paper on Welfare Reform: 1998b. Kyung-Suk. Reality of Social Welfare In Korea and Policy Issues (Human and Welfare Publish. Chung. Seoul).jstor. Seoul). Labor: 2001. Establishing Long-term Social Welfare Plan and Policy Issues (KIHASA Seoul). Health and Welfare Indicators in Korea. lee. Moon: 1998. M. Health and Welfare: 2000b. Y.). Living Profiles of Older Persons and Social Policies on Aging in Korea (KIHASA). Ministry Ministry Ministry Ministry Ministry of of of of of Health and Welfare: 2000a. in Korea Social Science Research Council (eds. Kim. . 'Social security expenditure in korea and ways to improve its level'. In. 48-58. Eunyoung. Mee-Gon: 2001.): 1999. Seoul). Method of Expanding the Range of the Disabled and Classifying the Disabled Level. Hong. Health Care System in Korea (Korea Institute for Health and Social Affairs. Cho and Y. Seoul). Oh. Park. Health and Welfare: 2001. Meesook. Health and Welfare: 2000c.24. National Welfare: Opening a New Horizon (Ministry of Health and Welfare. Byug-Ho and K. Ko: 2000. Won: 2000.10 on Tue. Seoul).

Suk. Kim: 1998. Chang-Young and M. pp.jstor. Current Poverty Issues and Counter Policies in Korea (KIHASA and UNDP. 187-209. Population and Housing This content downloaded from 152. National Statistical Office: 1996. Suk-Myung. Social Expenditure Database.SOCIAL WELFARE SYSTEM 289 National Statistical Office: 1996. . The Future Estimated Population. Analysis of Income Sources and Income Maintenance Schemes for the Elderly in Korea ( Jae-Eun and T. Korea Institute for Health and Social Affairs E-mail: Mskim@kihasa. 'The Recent Development of Welfare System in Korea: Transition to a Welfare State from a Welfare Society?' Social Security Research 16. 1998: 'National Pension' Goal Set-up for Social Security Development and Current Issues (Korea Institute for Health and Social Affairs. Daejun). Seoul).118. OECD: 1999. Seoul). 04 Oct 2016 02:22:11 UTC All use subject to http://about. Shin Dong-Myeon: 2000. 1995 (National Statistical Office. Yoon. Kim: 2000. Seoul). Park.10 on Tue.

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