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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Finally. disease. as a percentage of the Gross Domestic Product (hereinafter the GDP). Korea's social insurance fund is financed by contribu tions from employees. In Korea. several tasks remaining to be tackled to achieve a more complete role for social insurance. had increased from 5. it will. introduced in 1964.118. public pensions. as shown in Table I. SOCIAL INSURANCE Social insurance is a welfare system that helps the insured to get prepared of times of little or no income.24. it will discuss the current problems and future challenges facing the country's welfare system. however. was replaced by the National Basic Liveli hood Guarantee (hereinafter the Basic Guarantee law).2 percent in 1995. This content downloaded from 152. is the latest social insurance (Lee. It will then compare Korea's social welfare expenditures and programs with those of the Organization for Economic Cooperation and Devel opment countries. employers. disability. old age. Korea laid the groundwork for its social insurance with its four major compo nents over a short period of time. Work injury compensation insurance. is the oldest among them. and social services.1 percent in . There are.266 MEESOOKKIM lenge of reorganizing and strengthening its meager welfare system. Unemployment insurance. to 11. the Livelihood Protection law.10 on Tue. and both the pension system and heath insurance were reformed to extend coverage. 1998). II. there are four social insurance components: work injury compensation insurance. The social security budget.jstor. and the public pension program was established in 1988. This paper attempts to offer an overview of Korea's social security system from historical and comparative perspectives. To this end. enacted in 1961. adopted in 1995. 04 Oct 2016 02:22:11 UTC All use subject to http://about. health insurance. Health insurance has been widely adopted since 1977. In 1999. and the government. or death. and unemployment insurance. public assistance. first examine the structure and programs of social insurance.

and the injured. As a result of amendments made This content downloaded from 152. The government pays for the administrative cost of the system. The range of beneficiaries of work injury insurance has been expanded over time. who die in the course of their employment. assembly workers. benefit from the insurance (In. and employees. employees at any workplace with 1 or more workers.50 million Health insurance All people population All people Unemployment insurance Almost all workplaces established workers (2002) Work injury compensation insurance National pension Ministry.jstor. . occupation-related diseases. 1998). This social insurance system provides the insured with benefits for treatment of work-caused diseases and injuries. 1998). 1999).118. In 1964. After the enactment of the Work Injury Compensation Law in 1964. 1996). 2001 Type Recipients Number of participants MOL* 1964 Over 96% of MOHW* All workplaces 9. compensates for income losses.267 SOCIAL WELFARE SYSTEM TABLE I Types of Social Insurance of Korea. only miners. which develop over time. are also covered by the insurance (In. I. Now. 1998). the number of beneficiaries was expanded. Work Injury Insurance Work injury insurance is the older insurance in Korea. Kim. stick. employees are not required to make contributions to the fund (In. or the relatives of those.24. 04 Oct 2016 02:22:11 UTC All use subject to http://about. were covered (Chang et al. while treating disease and injury. MOHW: Ministry of Health and Welfare. In addi tion. and helps in preventing work-related injuries (In. disabled. year 16 million (2000) 9..10 on Tue. who worked at firms with more than 500 employees.27 million workers 1977 MOHW 1988 MOL 1993 MOL: Ministry of Labor. Since the work injury insur ance is being financed exclusively by contributions from employers.

Witnessing the need for health insurance. drugs and other therapeutic mate rials. and other services. and to save health care fees. 1998).268 MEESOOKKIM to the law in 1972. 1999).24. it was extended to all work places in the country (Change et al. 1998). In 1989. and after the financial crisis. 1999).. 04 Oct 2016 02:22:11 UTC All use subject to http://about. It was only during the 1970s that health insurance became a social issue. 2.. there are two special benefits: supplementary benefits for sever disability and for survivors. At the same time. 1998). medical and surgical treatments. 1998).118.. the national health insurance system was adopted in 1977 for firms with more than 500 employees (Choi et al. Against this backdrop.. Benefits of health insurance consist of both cash payment and in-kind benefits. Benefit types consist of: sick leave benefits. disease. In addition. a sickness compens ation pension.10 on Tue.jstor.50 million workers at 706231 workplace nationwide (Chang et al.. the insurance was extended to cover work places with 30 or more workers (Chang et al. The insurance was further extended in 1992 to cover workplaces with 5 or more employees. These benefits are of a case and in-kind nature. insured persons are required to make co-payments. twelve years after its inception. when receiving medical care services (The Editing This content downloaded from 152. To prevent unnecessary utilization of health care services/resources. In-kind benefits provided by health service centers include: medical consultations. the health insurance system was extended to cover everyone. the coverage was too minimal to function as a social security system. by having all participants share in the burden. 1999). Health Insurance Health insurance is a social security system designed to reduce the financial onus imposed by accident. medical assist ance for the absolute poor was adopted. president Chung Hee Park turned his atten tion to developing a social welfare program including health insur ance (Choi et al. As of 2000. such as nursing care and transportation costs (The Editing Committee of White Paper on Welfare Reform. including rural residents and the urban self-employed. (Chang et al. while the country was in the throes of economic . 1999). and a disability benefit (In. hospitalization. delivery of a baby. the total number of beneficiaries amounted to 9. operations. When the Health Insurance Law was enacted in 1963. or death.

private school employees. and in 1999. 04 Oct 2016 02:22:11 UTC All use subject to http://about. There used to be three types of health insurance programs for different target groups: (1) for government employees. The health insurance system is financed by contributions from the insured. 3. (2) for rural or urban self-employed individuals. Before 1973. 1998). 1998).org/terms .10 on Tue.. 1999). In the year 2000.24.. and private school teachers (private school teachers pension) had pensions. ineffective 1973 National Pension Law. only government employees (govern ment employees pension). 1998). The National Pension Scheme (hereinafter the NPS). As the National Pension system was adopted. As for hospit alization. prescription services were separated from dispensing services for the first time in Korean medical history. military personnel (military personnel pension). the centerpiece of public This content downloaded from 152.. employers. as well as to reduce drug expenses by suppressing the over prescribing of drugs (The Editing Committee of White Paper on Welfare Reform. and the government. A fixed cash benefit is also paid to cover a portion of funeral expenses (Choi et al. all three were incorporated into a single system under the National Health Insurance Act (Chang et al.SOCIAL WELFARE SYSTEM 269 Committee of White Paper on Welfare Reform. all people. Eight months after the inception of the separation mandate. the first and the third health insurance programs were combined into one.. including farmers and fishermen.jstor. the patient has to pay 20 percent of the total fee (Choi et al. military servicemen and their dependents.118. The Korean government had to come up with a way of easing the financial burden on medical insurance. became eligible for public pensions. 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. the National Health Insurance Corporation was confronted with a serious financial imbalance due to the increasing medical insurance fees that medical service centers require. 1998). and the self-employed. 1998a). In 1998. The separation mandate was adopted to prevent overuse/misuse of drugs. National Pension Korea's first pension system was adopted in 1988 with the amendment of the once unworkable. and (3) for employees of industrial or commercial companies (Choi et al.

1998). the minimum period of insurance was reduced from 15 to 10 years (Chang et al.10 on Tue. voluntarily participate in it. who are not working. 1999). is the newest. Since 1991 those employed at businesses with 5 or more workers were included in the pension scheme. As of 2001. As for the workplace-based group. Since 1994. with the exception of those working part-time. employees at firms with 10 or more workers are eligible for participation in the NPS. 1999).. The average income replacement level used to be 70 percent for those with 40 or more years of participation. who are not included in any one of the three insurance plans.. 1999). They can.118. To provide for financial security of the elderly. 1999). and 2. It was launched in 1995. 9. 04 Oct 2016 02:22:11 UTC All use subject to http://about.270 MEESOOKKIM pensions within Korea. Unemployment Insurance Among the four types of social insurance.24.. and those aged under 23. The target group of the NPS comprises those between the ages of 18 and 60. those employed at work places with 5 or less employees. Unemployment Insurance. and death. there were 5. when the unemployment rate in Korea was fairly low. .11 million regional participants in the pension scheme (Yoon. and to promote employment through job training and human development.jstor. but it was reduced to 60 percent when the law was amended (Chang et al. Pension benefits are provided to insured persons for life. All workers. In 1999. 1999). To achieve financial stability in the pension fund. rural dwellers were able to parti cipate in the NPS along with the previously insured urban dwellers. provides the insured with financial security against aging. and part-time workers were added (Chang et al. Full-time housewives.. are not covered by the pension scheme (Chang et al. The purpose of unem ployment insurance is to secure income for workers during times of unemployment. NPS participants are divided into two groups: workplace based participants and residential area-based participants. As of 1998. two years after the enactment of the Unemployment Insurance Act (hereinafter the UIA). the urban self-employed. the minimum age of pension benefits will be raised from the current 60 to 65 in 2033 (Chang et al. 4.06 million workplace-based participants. are covered by insurance..27 million workers from This content downloaded from 152. however.

PUBLIC ASSISTANCE 1. There are three types of benefits of unemployment insurance: support for employ ment security.118.SOCIAL WELFARE SYSTEM 1208000 workplaces were covered (MOL. self-support aid. The Livelihood Protection system is widely criticized because of its several limitations. In 1999. This Law provided the poor with six types of public assistance: livelihood aid. III. Public Assistance In Korea. children. when the Basic guarantee Law took effect. for over 38 years. and job training and human development. There used to be two types of Basic Guarantee recipients: Home and Institutional Care recipients and Self-support Care recipients. 2001). During the economic crisis. The public assistance system was officially launched in 1961. 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. 1999). the This content downloaded from 152. maternity aid.. unemployment benefits. 04 Oct 2016 02:22:11 UTC All use subject to http://about. and medical aid. Livelihood aid. educational aid. the insured is required to have worked at an insured company for at least 6 months. the public assistance system used to be called "Livelihood Protection" until the enactment of the National Basic Livelihood Guarantee Law in 271 . and those who were cared for at welfare institutions. 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. burial aid. 2000). the disabled (demographic eligibility criteria for Home Care). Live lihood aid. and burial aid were provided only to Home Care and Institutional Care recipients (Ministry of Health and Welfare. To be eligible for unemployment insurance. educational aid. maternity aid. but lack sufficient resources for living. unreasonably narrow selection criteria. 1997). and other structural problems. Home and Institutional Care recipients were those without the ability to work. including low benefit levels.24.10 on Tue. Self-support Care recipients were those who were able to work. The unemployed can be covered by the insurance for between 2-7 months (NSWC. Included in this group were the elderly. and medical aid were provided to both recipient groups.

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

p.118. There are seven types of protection: livelihood aid. self-support aid.9 28. and burial aid. over million people in poverty were provided with livelihood aid in 2 whereas only 0. 2001. educational aid. suggest that every aspect of living is now protected. 2001). medical aid. As for Home Care . children under 18) have been lif and anyone. the Korean social safety n has been strengthened. Since the adoption of the new law. Moreover. 77. According to the new law. the overall benefit level. having increased by as much as 210 percent (Kim.5 million people were covered by the same progr in 1999. ma nity aid. Workshop on Securing Social Safety Nets. housing (newly added). KIHASA. 04 Oct 2016 02:22:11 UTC All use subject to http://about. but in 2001 it was increased to 1980 won.9 percent (Kim.1 100 Source: Mee-Gon Kim. 2001).24. The Korean government has markedly increased the budget f basic livelihood aid. entitled to receive livelihood aid. This content downloaded from 152. 2001). Under the new law for the first tim in the Korean welfare system. the per capita basic livelihood budget was 639000 won. housing aid is provided. w were not eligible for the livelihood aid according to the old law percentage has risen by as much as 40. In 1997. when the new law was not yet in effect (see Table (Kim.2 29.0 percent. the demogr eligibility criteria (65 and older. per beneficiary has risen. "Basic Livelihood Guarantee System as a So Safety Nets". Owing to the Basic Guarantee 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.jstor. who fits the family income and property criteria.10 on Tue. As for Self-support Care recipients. the percentage of recipie has risen by 9.

viz. Second class medical assistance. which is given to those in the lowest-income class.2 in 1970.7 in 1995 (National Statistical Office. First class medical assistance.5 in 1995.13 percent of the elderly over 65. The government. IV. 04 Oct 2016 02:22:11 UTC All use subject to http://about. first class and second class assistance.500 won per visit (MOHW.5 in 1970 to 1. increased almost twice as much. The medical assistance system was first adopted in 1961. There are two kinds of medical assistance depending on the degree of the beneficiary's poverty. Life expectancy at birth has increased from 63. Only in-kind benefits are provided to them. which is provided to people from the second lowest-income class. including hospitalization or outpatient services free of charge.10 on Tue. offers medical services with minimal charge. The system is more closely linked to the health insurance system.90 percent..12 percent. 1995). the medical assistance program was managed separately from the Livelihood Protection law. Welfare for the Elderly Due both to the low fertility and mortality rates in Korea. Medical Assistance Medical assistance is provided to those who are eligible for public assistance. had to stop providing the assistance due to a lack of funds. to 73. however. . unlike other countries. Due to the increase in the elderly population and the decrease in family responsibility for supporting the elderly.274 MEESOOKKIM 2. 1970. at a time when the family experienced both structural and thus functional changes. the elderly population is increasing.118. reaching 5. The total fertility rate has decreased from 4. 1995).jstor. As shown in Table III. This content downloaded from 152. in 1960 the proportion of the elderly over 65 was only 2. provides various medical services.. Korea became an aging society in 2000 with 7. recipients pay 20 percent of fees. Thereafter. where medical assistance programs are part and parcel of public assistance. To be eligible for benefits one must be proven to live under the poverty line. and to 74. 2000b). they pay 1. when the Livelihood Protection law was enacted. but after 30 years. SOCIAL SERVICES 1.24. in 1990. when hospitalized.3 in 2000 (national Statistical Office. and when receiving outpatient services.

2000). Public assistance is available to the low-income elderly.13 7. Even the other pension scheme does not cover much of the ag population.82 5. as shown in Table IV (Suk.24. public assistance. This content downloaded from 152. The main public pension program in Korea is the NPS which covers all citizens regardless of their occupations. 1996.118.SOCIAL WELFARE SYSTEM 275 TABLE m Elderly Population by Year Year 1960 1970 1980 1990 2000 2001 2025 % 2. As a . The public assistance system in Korea has been changed from the Live lihood Protection to the Basic Guarantee in 2000.33 Source: National Statistical Office. There are several types of programs provided by the government for the elderly. wh were also struggling with financial difficulties.10 on Tue.12 7. Public pensio involve four separate programs: the national pension launched 1988. 2000). Governmental policies are mainly geare toward protecting low-income elderly. 7.jstor. as mention earlier.5 percent of the aged population received public assistance (Suk. Since its recent implementation the NPS covers only 1. According to the new public assistance system. ill health early retirement.90 3. Problems that t Korean elderly are facing . 1999.including financial insecurity. the Government Employees Pension in 1960. elderly care became an important social issue.cannot be treated solely within t family. The Future Estimated Population. Most of the elderly lost one or more of their sources o income.43 14. Public policies for financial security of the elderly include pensions. the Militar Personnel Pension in 1963. Furthermore after the economic crisis the financial situation of the elderly on worsened.21 3. the life the elderly became harder. Societal involvement is absolutely necessary. which prov financial security. health protection and housing. and the Private School Teachers Pension in 1975. unli the other three pension schemes. people livin below the poverty line are eligible for public assistance benefits. and were not able to depend upon their adult children. and loneliness . 04 Oct 2016 02:22:11 UTC All use subject to http://about.1 percent of the elderly aged 65 and older. and old age pensions.

org/terms .10 on Tue. In other words. those over 80 r a month. were covered by it (Suk. 2000.84 0. 150. 1999). p. An old age allowance is provided to those who public assistance.jstor.50 20.13 0.06 0. serving as a supplemen utory pension. the benefi age allowance is too low to serve as a social safety n years.118. treat ment for dementia.24. With the implementation of National Health Insurance in 1977.276 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. and chronic disease and health care services for the home-ridden elderly (MOHW. free health examinations. and the rest were covered by medical assistance (Chung. 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. is to protect the aged not particip (Suk. but are not covered by a pension of an old age allowance. 2000). 2000b). 584976 elderly.6 7. the elderly need to pay only 20 percent of all hospitaliza This content downloaded from 152. As of 2000. medical assistance. while the other amount (MOHW. 04 Oct 2016 02:22:11 UTC All use subject to http://about.2 percent of the elderly were covered by the insurance.2 percent are public assistance recipients. 2000b). one membe receives only 22500 won a month. With health insurance. 2000). The recent health care policies for the elderly primarily deal with health insurance.1 Source: Suk.3 per aged population. and th percent are low-income elderly (Suk. 2000) 53. 17.53 23. the low-income elderly receive 30000 won a couple is eligible for public assistance. Analysis of Income Sources and Inco Schemes for the Elderly in Korea. 96.

In 1999. including general examinations including blood tests and X-ray examinations to special geriatric diseases. the elderly are able to utilize hospitals more often.3 percent (280000 persons) of the elderly suffer from dementia. and 30-55 percent of all medical fees (Chung. 1999). There are three types of home care service in Korea: home help services. Currently.118. For the elderly with dementia. 15 hospitals that treat dementia are now open. 2000b). A further expansion. 2000b). free nursing homes. and built consulting offices for the treatment of dementia nationwide. 2000b). and by the year 2001. low-cost elderly homes. Since many of the elderly suffer. from more than one chronic disease.SOCIAL WELFARE SYSTEM 277 tion fees. 2000b). The elderly. there will be a total of 60 (MOHW. 1998a). and this number is expected to increase over time (MOHW. such as helping with . being escorted to a hospital. the government has promoted home care services for the elderly with mental and physical disabilities. There was seven types of welfare facility for the elderly in Korea: free elderly homes. to cover various geriatric diseases. the elderly are burdened by high medical costs. The government established comprehensive long term health and welfare policies.33661 elderly received free health examinations (MOHW. day care services through which the elderly are cared for during the day time. By 2003. occurred in 1996 (Editing Committee of White Paper on Welfare Reform. and the insur ance covers a limited number of them.24. To improve the health of the elderly by diagnosing geriatric diseases at an early stage. Due to the well-established health security system in Korea. 04 Oct 2016 02:22:11 UTC All use subject to http://about. bathing.jstor. 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). there were 21 hospitals for the elderly. however. The free health examinations were extended. who need housing. 8. including diabetes and cataracts. the Korean government has been providing free health examinations to the low-income elderly since 1983. 1999). such as cancer. As of 1999. Since one-third of the elderly are not able to conduct daily living activities without help from other (KIHASA. in 1992. at least one additional hospital will be built to treat it (MOHW. This content downloaded from 152. can live in welfare facilities. in every city and province.10 on Tue.

6 resort centers.2 percent. and facilities for those with dementia. the elderly are encour aged to have a vital life through volunteer activities in the fields of traffic control. who need housing. comprising 3. Welfare for the Disabled There are 1449500 disabled persons as of 2001. The government of Korea encourages the elderly to participate in volunteer as well as leisure activities for active aging.09 percent of the total population (Byun et al. there are 527 elderly schools. Accordingly. and 118 multi-purpose senior centers.jstor. all of which are built for the active aging (MOHW. is increasing as well. whereas the number of people with a disability after birth. 2. It is expected that the number of the elderly. the government plans to expand various types of welfare facilities.4 percent of the elderly (337000 persons). 2000b). who have become disabled due to age related diseases.118. This content downloaded from 152. In addition. and nursing homes. the Welfare Act for the Elderly was amended to appoint the elderly to serve as community volunteer leaders. whether free or at cost.10 on Tue. and 250000 won a year for heating costs (MOHW. 2000c). protecting 12751 elderly (MOHW. 2000b). lived in welfare facilities (MOHW. The government provides each of them with 44000 won a month for managing them. In the year 2000.278 MEESOOKKIM low-cost nursing homes. 0. Also. Post-retirement leisure and social activities are becoming an increasingly important social issue as life expectancy after 65 rises.. there were 229 elderly welfare facilities. In 1997. will increase due to the rise in nuclear family households and the changing attitude of the elderly towards living arrangements. resource conservation. is increasing at an accelerating rate. In 1985.. who want to live separately from their adult children. including car or industrial accidents.4 percent in 2000 (Byun et al. As for leisure facilities. and social activities. The number of elderly people with resources. is increasing. As of 1999. 2O00b). 2001). due to various accidents. general elderly homes. the rate of acquired disabil ities was 81. The number of people with a disability at birth is gradually . The number of the elderly. 2001). 04 Oct 2016 02:22:11 UTC All use subject to http://about. but the percentage increased to 89. to meet such demand.24. there were 38452 elderly activity centers in 1999 (MOHW. 1999).

and mental disabilities (Korea Welfare Committee for the Disabled.10 on Tue. class 1 and class 2 types. 1998a). occupational rehabilitation. The main objective of welfare for the disabled in Korea is to achieve their complete social integration by activating their social participation. so that they might participate in social activities including work (MOHW.24. medical support.25% yearly interest rat. welfare facilities. which in turn served as a basis for understanding the disabled and living closely with them (Editing Committee of White Paper on Welfare Reform. education support. a technical devices provision. welfare for the disabled has focused on creating a social environment in which the disabled can mix with other people. Accord ingly. 1999). 1998a). when the act was amended and called the "Welfare Act for the Disabled" (Editing Committee of White Paper on Welfare Reform. 04 Oct 2016 02:22:11 UTC All use subject to http://about. 2001). when the Para-Olympic Games were held in Seoul. 15 percent of the disabled total.2 who are not capable of working. chronic intestinal disorders. welfare for the disabled under went dramatic development with the instituting of other measures. to those who could work. and in 1989. as well as by creating the necessary social conditions. Basic Liveli hood Aid recipients).jstor. In the year 2000. when the Welfare Act for the Mentally and Physically Disabled was enacted. who have financial difficulties (viz. the govern ment provided loans with a low interest rate (8. To This content downloaded from 152. the category of legal disabilities was expanded to include serious. The Act further matured in 1988.. 2001). From that point on. and the providing of easy access to relevant facilities. This is because the range of disabilities in Korean is far narrower than in other OECD countries.118.SOCIAL WELFARE SYSTEM 279 Still. Policies for the disabled include income support. 1998). Those disabled. In 1999. repayment within five-years with a five-year grace period). the rate of the disabled in Korea is much lower than that in developed countries. and providing them with equal opportunities (Editing Committee of White Paper on Welfare Reform. 42000 disabled . amounting to 12 million won per household (MOHW. received an allowance of 45000 won per person (Park and Kim. Welfare for the disabled started in 1981. tax and other fee exemptions. where more types of disabilities are included. In 1997. receive disability allowances in addition to livelihood aid. 1998b).

org/terms . The government provides technical devices free of charge to the low-income disabled. To alleviate the financial burden of the disabled and to support them with income. 2001).4 and only 20 percent to the secondary or tertiary medical service providers (MOHW. and therefore. including the exemption of public facility fees. health insurance covers about 80 percent of their cost (MOHW. 1999a).jstor. with more than 300 workers. customs.23 percent (Byun et al. In conjunction with this it should be noted that the employment rate for the disabled in the public sector has increased to 1. the number of days of medical insurance covering the disabled was extended to one year. telephone and television bills. 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. 04 Oct 2016 02:22:11 UTC All use subject to http://about.10 on Tue. This was done to break the cycle of poverty with younger generations of disabled families (MOHW. In 1992. constituted only 0. For other disabled individuals. and vehicle related taxes (MOHW. and income inheritance. 2000b). To support the financial independence of the disabled.. Since 1996. the registered3 disabled could receive medical care service throughout the year (Editing Committee of White Paper on Welfare Reform. the government runs 150 workplaces and 12 work facilities for them as of the year 2000 (MOHW.118. 2000b). 2001).280 MEESOOKKIM promote the financial independence of the disabled.24. various fees and tax example programs are available. 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). 1998a). educational support was extended to school-age students from lower class disabled families.54 percent of the employee pool. the government gives priority approval to the disabled. the disabled need to pay only 50 percent of their medical fee due the primary medical service providers. Junior high and high school students of low income disabled families had their entrance fees and tuition covered. This content downloaded from 152. In addition. Disreg arding or not complying with this mandate is subject to a fine. the low-income disabled can receive a solidly built wristwatch and a TV caption box (MOHW. rail road and subways fees. 2000a). In 1998.

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. Now. occupational rehabilitation programs and lifelong education. have been increased since 1997.281 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. however.24.10 on Tue. Source: The Ministry of Health and Welfare: 2000a. such as day care and short-term care services. who constitute only 2 percent of the total number of disabled persons in the . 2000b). and welfare institutions that provide them with housing and medical treatment. 1999a. Various types of home care arrangements. Current policies are being made increasingly sens itive to the needs of disabled persons living at home. most welfare policies for the disabled have been geared toward institutionalized disabled persons. that is changing. There are 184 welfare centers and 188 welfare institutions for the disabled in Korea as of 2000 (MOHW. Until recently. There are two types of welfare facilities for the disabled: welfare centers that provide those living at home with medical treatments. This content downloaded from 152.9 billion The Low class Disabled (class 1 and class 2) Medical 93251 Primary care: 50% 9. 04 Oct 2016 02:22:11 UTC All use subject to http://about. 'Guide to Welfare for the Disabled'.

First. father less families constitute most (82. police stations. post offices.jstor.8%. 2000).6.10 on Tue. Despite the increase in the number of lone parent families. compared to single female household heads. in their 40s. the crude divorce rate. 1998). because there has been continuing social prejudice against a mother being remarried (Kim et al. the "Conveni ence Facility Installation Law for the Disabled.282 MEESOOKKIM Since 1991. The lone parent family group is divided into two subgroups: the fatherless family and the motherless family. 1998). Second. women have a longer life expectancy than men. was only 0. and having children outside of marriage (12. This content downloaded from 152.9%. This results from the fact that the number of total households including single member households has been increasing at a higher rate. Welfare for the Lone Parent Family A lone parent family is defined as a single parent household .9 percent in 1985. to 7. 1995). 04 Oct 2016 02:22:11 UTC All use subject to http://about. has decreased from 8. the high death rate among men.. In . their lower participa tion is social activities means. The disproportionately large number of fatherless families is trace able to several factors.5%.118. including government offices. brought about a marked increase in the number of fatherless families (National Statistical Office. or abandonment (22. in their 40s.with one or more children under 18 years of age. In addition.4 percent in 1995 (National Statistical Office. and easier to facilities began to be provided. (a rate calculated on the basis of the number of divorces per 1000 population). in 1995). The divorce rate is on the rise in Korea. 3. Elderly and Pregnant Woman" was enacted. to the total number of house holds in the country. the government has been making access to a wide range of facilities convenient.a household led by a male without a wife being present or by a female without a husband being present . single male household heads have a higher tendency to remarry. is double that of women (National Statistical Office. the proportion of this group. The death rate of men.1%) of the lone parent families. 1998a). that they are less exposed to risks of accidents that may result in death. 1998). In Korea. and department stores (Editing Committee of White Paper on Welfare Reform. In 1980. 1998). In recent years. 1995) (National Statistical Office.24. The main causes of a lone parent family are death of a spouse 54. divorce or separation.

1999b). 2000b). Whenever lone parents have problems associated with work.0). an apartment). Due to the rise in the divorce rate within Korea. (MOHW. Policies for lone parent families in Korea consist of social insur ance and public assistance. They are also entitled to rent dwelling units (for . 04 Oct 2016 02:22:11 UTC All use subject to http://about. living expenses are provided for them. with a low-income interest rate of 8. loans.10 on Tue.5 in 1990. a total of 742 families were living in permanent rental apartments (MOHW. While they are receiving job training. and public assistance consists of the Basic Guarantee. or children. the number of low-income lone parent families covered by government protection measures is 68815. Currently. most social policies are directed toward low income families. and medical fees. 1999b).9 in 1985.0 in 1990. Lone parent families are also eligible to get welfare loans from the govern ment. This content downloaded from 152. 1999b). and has provided child allowances (525 won per day) to 6202 children under 6 years of age. education fees for junior high and high school. and 2. housing.75 percent (MOHW. the government has provided for the reimbursement of educational fees (tuition and entrance fees) for 14989 students. To ease the financial burden of lone families. most of whom are families without a father (81. Although there are some policy provisions in place for middle/upper income lone parent families. but also motherless families are covered by the Act.SOCIAL WELFARE SYSTEM 283 but it increased to 0. As of 1999.jstor. 1998). The latest statistics show that the current crude divorce rate in Korea is behind the rate in Great Britain (3. as long as they want. Bene fits include a child allowance. the number of lone parent families is expected to increase in the years to come. Lone parent families living below the poverty line are eligible for the Basic Guarantee and medical assistance. Additionally. when they are unemployed (MOHW. Low-income lone parent families living above the poverty line are protected under the Fatherless Family Act (enacted in 1989). Not only fatherless families. 1. the highest among the OECD countries. Another service that a lone parent family can receive is counseling. family. Veteran Protection. 1.6%. Social insurance includes a pension.118.0 in 1997 (National Statistical Office. lone parents can receive job training. job training. The amount is 12 million won for 5 years. in 1999) (MOHW. and low-income lone parent family protection. 1999b).

65 percent (30 trillion won) (Choi and Ko.71 5. as compared to the other OECD countries.65 1998 11. and link them to community resource persons and organizations. 2000. V WELFARE EXPENDITURES Until the recent economic crisis. right after the financial crisis. according to the OECD estimate of social security expenditures on social insurance. and social services (expenditures from the voluntary sector are excluded) (KIHASA.jstor. social welfare benefits in Korea were low.09 percent of the GDP (KIHASA.28 4. social security expenditures under went a drastic increase to 11. was spent for social security. a total of 8 trillion won. 2000). pp. they can visit counseling offices with no charge for the service. 2000).52 4.09 Source: Korea Institute for Health and Social Affairs. 436-37. 04 Oct 2016 02:22:11 UTC All use subject to http://about. The continuous increases in social expenditures came from growth in the budgets This content downloaded from 152. in . was increased in 1997 to 6. Note: This is based on OECD Estimation of Social Security Expenditures. Professional counselors not only counsel them.23 5.10 on Tue. Health and Welfare Indicators in Korea.52 percent of the GDP.118. In 1998. as a percentage of the GDP.284 MEESOOKKIM TABLE VI Social Security Expenditure as a Percentage of GDP (1990-1998) Year 1990 1991 1992 1993 1995 1996 1997 Rate 4. Social security expenditures.47 6. As shown in Table VI. 2000b).24. public assist ance. or only 4. but also provide them with information on child-rearing methods.63 4.

10 on Tue.24. expendit ures on health and pensions are projected to reach the level of the developed countries (Choi and Ko.jstor.67%).7%). the elderly and family a more important social issue in the years to come. Social welfare areas that are in need of urgent expansion include public assistance and healthcare. Choi and Ko (2000) claim that the This content downloaded from 152.23%) among the OECD countries. which includes expenditures for health insurance and medical assistance. however.0%) of total social security expenditures. in comparison with some of the OECD countries. in comparison to the other OECD countries. 04 Oct 2016 02:22:11 UTC All use subject to http://about. 2000). social services (3. Social security expenditures in Korea will inevitably rise due to the ever-accelerating process of population aging.0%). This has led to further dissolution of the family and an increase in the number of divorces. almost three times as high as Korea (Choi and Ko. constituted the largest share (37. One of these has been the fact that women are increasingly entering the labor 285 . Even for some of the OECD countries like Japan and the United States. Expenditures on health.118.SOCIAL WELFARE SYSTEM devoted to social assistance and unemployment insurance (Choi and Ko.7%) (Choi and Ko. the ratio of the social security budget to the GDP was over 14 percent. and the increasing demand for social welfare.7%). Current social security expenditures for Korea.9%). have still not reached an adequate level. 2000). Korea's social security expenditures in 1995 were the second lowest (5. followed by unem ployment (34. were lower in every social security category with the exception of work injuries. pensions (18. where the social security expenditures as a percentage of GDP is comparatively lower than other developed countries. followed by Mexico (3. In the near future. Korea's social expenditures. The underprivileged and the elderly will call for more protection from the government as the country's economy grows. 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. and public assistance (2. All of these factors will make welfare for children. 2000). work injuries (3. Meeting the increasing demand for social welfare would require the Korean government to raise social security expenditures over time in a prudent manner. 2000).

. because the poverty level in North Korea is very . FUTURE CHALLENGES TO THE KOREAN WELFARE SYSTEM Korea has undergone a bewildering array of social changes the aging of the population. and their financial situation is much worse than that of the younger generation (Chung et al. 1998). 04 Oct 2016 02:22:11 UTC All use subject to http://about. and its GNP is much lower than that of South Korea. Korean society will have to meet the welfare and health needs of the elderly. Thus. Korea would require a welfare system buttressed by This content downloaded from 152. and Korea will need to establish a social safety net with broad coverage to protect them in the aftermath of the crisis. VI.24.286 MEESOOKKIM proper ratio of gross expenditures on social security to the GDP should be 15 percent. Over 90 percent of the elderly in Korea suffer from chronic disease. Now. Also.118. because they are the ones who suffer most from poor health and financial difficulties. In the event of unification.jstor. the 1997 economic crisis with its adverse impacts. As a result of the diminishing role of the family as an informal elderly care mechanism. but much higher than the pre-crisis level. 2000). as a result of trace instances of unemployment in many of the developed coun tries. Before the crisis. and the high expectation of unification between the two Koreas.10 on Tue. along with the increasing participation of women in the labor force. Korea was approaching full employment with an unemployment rate of 2. the buck of protecting the elderly has been passed on to society as a whole.0 percent. The economic crisis occasioned an unemployment rate that is still lower than the OECD average. Korea should be prepared for raising the living standard of people in North Korea before taking further steps towards unific ation. Due to the rapid aging of its population. social protection for the unemployed will become an increasingly important issues. All of this has called attention to the necessity of strengthening social security and the country's social safety net. Korea is likely to face yet higher unemployment rate with its advancing economy. 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.

a medium size hospital.6 percent in 2000 (Byun et al. and an appropriate combination of social safety measures to protect all the needy people in North Korea. the Korean welfare system should adopt new strategies to increase budget allocations to enhance programs. In . Hwang. and in Australia 82 percent. W. 2 In Korea. in France 98 percent. he/she needs to first go to a primary medical service provider or clinic. 1998. Change. D. Meanwhile.5 percent in 1996 (Ademan and Einerhand. 'The growing role of private social benefits'. In Canada 112 percent of the absolute poor are covered by social assistance. Einerhand: 1998. the United States: 3.24. Byun.5% as of 1993). S. Kwon and H. 2001). constituting 26.0%. NOTES 1 In developed countries the coverage of the social safety net is much higher. S. The current contribution rate for the private sector in Korea is much higher than that for the other OECD countries (the United Kingdom: 1. Seoul). Lee and J. In-Hyup. REFERENCES Ademan.jstor. Social Welfare (Seoul National University. No. 2001).SOCIAL WELFARE SYSTEM 287 increased expenditures. 04 Oct 2016 02:22:11 UTC All use subject to http://about. Lee. This content downloaded from 152.118. 3 The disabled should register to get covered by various policies. and Sweden: 4. in the midst of globalization and torrential social changes. if one is sick. then a secondary one.0%. The lower the number of classes. 32. in New Zealand 92 percent. In sum. H.6%. in Finland 112 percent. Young-Chan. and coverage. Oh: 1999. the private sector should continue to be involved in strengthening the social welfare system through volunteer activities and dona tions. Kim. the registration rate was only 62. and M. to a tertiary one. 1998). the more serious is their handicap. KIHASA.. Lobour Market and Social Policy: Occasional Papers. However.10 on Tue. 4 In the Koran medical system. Kye: 2000. benefit levels. the disabled are categorized into several classes according to the degree of their handicap. welfare expenditures need to be increased. Germany: 4. J. S. A 2000 Survey on the Disabled (KIHASA. Suh. a large hospital. and public sector participation in financing welfare funds needs to be strengthened. in Germany 89 percent.

Ko: 2000. lee. Estimation of Korean Social Security Expenditures: 1990-1997. White Paper on Health and Welfare. Ministry Ministry Ministry Ministry Ministry of of of of of Health and Welfare: 2000a. Labor: 2001. in Korea Social Science Research Council (eds. A Survey on Lone Parent Family (Unpublished Paper). Seoul). Byun and H. In-Jae: 1998. Method of Expanding the Range of the Disabled and Classifying the Disabled Level. Lee. The Life of Low Class Lone Parent Family and Policy Issues (KIHASA. Kwon. Kim. Kyung-Suk. Meesook. Seoul). Health and Welfare: 2000b. Byug-Ho and K. Current Welfare for the Elderly and Tasks (Nanam Publisher.24. Health and Welfare Policy Forum 49. Park. Ka-Ok (eds. Korea Welfare Committee for the Disabled: 1999.jstor. Choi. Moon: 1998. Hong.).. National Welfare: Opening a New Horizon (Ministry of Health and Welfare. Eunyoung. Health and Welfare Indicators in Korea.): 1999. Won: 2000. Y. in Chang-Young Park (eds. Establishing Long-term Social Welfare Plan and Policy Issues (KIHASA Seoul). 'Social security expenditure in korea and ways to improve its level'. 1998: The Korea Welfare State: Ideals and Realities (Nanam Publishing Corp. White Paper on Labor. Korea Institute for Health and Social Affairs: 2000. B. Reality of Social Welfare In Korea and Policy Issues (Human and Welfare Publish.): 1999. Cho and Y. Health and Welfare: 2001. Chung. Lee: . Byun. 'Evaluation on social welfare policies and tasks'. Presented at the Workshop on Securing Social Safety Nets (KIHASA. Sun-Jin: 1998 'Welfare for the disabled'. Y. Living Profiles of Older Persons and Social Policies on Aging in Korea (KIHASA). Guide to Welfare for the Disabled. Ministry of Health and Welfare: 1999a. Y. Guide to Welfare for the Disabled Ministry of Health and Welfare: 1999a. Ministry of Health and Welfare: 1990b. Seoul). Kyung-Hee (ed. Seoul). 48-58. In. White Paper on Health and Welfare. Seoul). Seoul). Cho. Chung.). Kyung-Hee. Lee. Editing Committee of White Paper on Welfare Reform: 1998a.10 on Tue. This content downloaded from 152. Ministry of Health and Welfare: 1997. Annual Report on Welfare Facilities. Mee-Gon: 2001. Annual Report on Welfare Facilities for the Elderly. A National Survey on the Elderly Life and Their Welfare Need (KIHASA). 'Basic livelihood guarantee system as a social safety nets'. Seoul). Editing Committee of White Paper on Welfare Reform: 1998b. J. Survey on Low Income Lone Parent Family. Seoul).118. 04 Oct 2016 02:22:11 UTC All use subject to http://about. S. Kim. Health Care System in Korea (Korea Institute for Health and Social Affairs. Welfare Reform in Korea Toward the 21st Century: To Enhance the Quality of Life in the Globalization Era (Ministry of Health and Welfare. J.288 MEESOOKKIM Choi. Oh. Kim and W. S. pp. Ministry of Health and Welfare and KIHASA: 1999b. M. Health and Welfare: 2000c.

118. Korea Institute for Health and Social Affairs E-mail: Mskim@kihasa. Kim: 1998. Chang-Young and M. Jae-Eun and T. Current Poverty Issues and Counter Policies in Korea (KIHASA and UNDP. Social Expenditure Database. Seoul). OECD: 1999. Park. Daejun). The Future Estimated This content downloaded from 152. Analysis of Income Sources and Income Maintenance Schemes for the Elderly in Korea (KIHASA.10 on Suk.24.jstor. Yoon. Suk-Myung. Seoul). Kim: 2000. 04 Oct 2016 02:22:11 UTC All use subject to http://about. 1995 (National Statistical Office.SOCIAL WELFARE SYSTEM 289 National Statistical Office: 1996. . National Statistical Office: 1996. Shin Dong-Myeon: 2000. 1998: 'National Pension' Goal Set-up for Social Security Development and Current Issues (Korea Institute for Health and Social Affairs. Seoul). Population and Housing Census. 187-209. 1980-1996. 'The Recent Development of Welfare System in Korea: Transition to a Welfare State from a Welfare Society?' Social Security Research 16.

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