Five welfare suggestions

Controversy over a new basic pension for senior citizens has gone beyond the boiling point. The enlargement of our welfare is dominating our local politics these days. The administration’s willingness to leave from an expensive campaign promise could have be foreseen, especially when you recall how the promise was made - a time of intense rivalry over welfare policies during last year’s presidential campaign. The resentment over the broken promise, the sense of betrayal and political exploitation of both parties could also be foreseen.

But if all the welfare policies promised during last year’s campaign were carried out, a sustainable social security system wouldn’t be possible and public finances would be wrecked. The consequences of that would translate into even more disastrous social divisions or even a crisis.

A better social welfare infrastructure is certainly essential considering the high rate of unemployment among our youth, an aging population and rising income inequalities, which have turned the country into a society of the lucky 20 percent and the unlucky 80 percent in lower-income categories. Political groups that were not interested in welfare before, or even were against it, poured out welfare pledges over the last couple of years. It comes as no surprise that some of those promises made in the heat of the political moment were unfeasible.

From the line-up of welfare policies in existence, South Korea has the appearance of a social welfare heaven. But in fact, the system lacks substance because most of those policies are connected to means, or personal assets. In terms of welfare for seniors, South Korea ranks 67th among 91 countries, according to HelpAge International, a global organization devoted to the rights and welfare of older people. In the category of stability of incomes for seniors, Korea ranked 90th - second to last - which gives a good idea of the state of insecurity Korean old people live in.

Because welfare programs are rushed and implemented with haste, some lucky older people get double and triple the benefits while others get none. Polarization is also evident in welfare benefits - it’s not a very fair system - deepening social divisions. All of this is because our welfare plans have not been organized very well or thought out.

South Korea is a unique country where public money finances politics, research and many civilian activities. Welfare is now added to the list. It is no wonder that our public finances are being stretched. Even if taxes are hiked to better accommodate today’s priorities, there never would be enough money to afford some welfare programs as currently conceived.

Moreover, our current welfare policies are too complicated. Even experts cannot fully comprehend them or confidently describe who benefits and how. Under the vague and loose system, it would likely cost a great deal to sort out individual benefits and weed out irregularities and waste. The issue of money falling into the wrong hands - people not really in need - already poses the biggest challenge to the welfare program.

The answer to these problems is a comprehensive reworking of the public welfare system. The government must organize a public welfare policy team and draw up a comprehensive welfare program. That is the only way to use taxpayers’ money wisely and constructively help needy people. But there must be guidelines from the start.

First, the basic social security act should be modernized so that the state can provide minimum living, health and education expenses for all Korean citizens. All other welfare policies should be chucked out. If the state can guarantee basic living expenses, there will be no need to subsidize extras for seniors, child care, college tuition, unemployment and internships for the youth.

Second, infrastructure should be expanded and improved so that all people who are able can work and earn a basic living.

Third, the welfare system should be simplified so that anyone can understand the benefits and how one qualifies. A simplified system can prevent blind spots, reduce administrative costs and cut back on irregularities. People would better understand what social benefits they are entitled to.

Fourth, public welfare should ensure basic social security to all, but it doesn’t mean that all people are entitled to equal living standards. The state should guarantee public medical services and education, but not private hospital or education services.

Fifth, the tax system must be revamped in order to boost both fairness and revenue. The revisions should simplify the tax code while raising the value-added rates. Various quasi-taxes should be scrapped so that taxpayers will be satisfied while revenue continues to be raised by the state.

Translation by the Korea JoongAng Daily staff.

*The author is the head of the New Civilization Policy Research Institute.

by Jang Ki-pyo