Seminar spells out plethora of plans for improving welfare

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Seminar spells out plethora of plans for improving welfare

Koreans want more welfare benefits, but they want rich people and big business to pay for them, a survey showed.

Since the Democratic Party embraced the idea of wider welfare benefits in 2011, both the opposition and the ruling party have competed to promise more and more. But promises met reality last month when the Park Geun-hye administration admitted it couldn’t afford a 200,000 won ($186) pension for all senior citizens. It had to trim its pension plan.

A forum hosted by the JoongAng Ilbo, JTBC and the Korea Institute for Health and Social Affairs explored different welfare models for Korea. The 2013 Yumin Forum took place Monday at the Hoam Art Hall in central Seoul.

It was agreed at the forum that the desire to expand welfare was shared by both the conservatives and liberals. Shin Young-seok, vice president of the Korea Institute for Health and Social Affairs, recommended that Korea increase its welfare spending to a certain level, but said a long-term plan is needed from the start.

“Korea has a stable fiscal situation and its current account has maintained a surplus,” Shin said. “Its ranking has also risen in the IMC World Competitiveness Yearbook, indicating the high sustainability of the country’s economy.”

But Korea needs to spend more on welfare, he said. As of 2012, Korea was estimated to spend 9.3 percent of its gross domestic product on welfare - far lower than the average of 21.9 percent in OECD countries.

At the symposium, the Korea Institute for Health and Social Affairs announced the results of its latest survey showing public perceptions of the welfare issue. According to a poll of 1,000 adults from around the nation, 55 percent said economic growth is more important than boosting welfare, while 42 percent said the opposite.

About welfare programs, 53 percent of the respondents said wider benefits were needed, while 11 percent said benefits should be reduced. Another 33 percent said the current level of spending should be maintained.

The younger population is keen for wider benefits, according to the survey. In the poll, 70.5 percent of respondents in their 20s said they want more benefits, while 66.1 percent of those in their 30s wanted expanded welfare programs. Only 34.5 percent of respondents in their 60s and 70s said they want wider welfare programs.

While there was a consensus at the symposium on the need for more welfare, opinions differed on how fast the government should expand its programs. While liberal participants said Korea has the need and the capability to invest in welfare programs to provide wider benefits, conservatives said Korea’s unique situation must be taken into account in drafting a policy.

“There are no free welfare benefits,” said Yoon Hong-sik, professor of public administration at Inha University. “But there is always something we can share. Since 1993, wealth distribution, despite economic growth, became increasingly unfair and only the top 30 percent saw increases in their incomes. If this imbalance continues, we will eventually see a crisis.”

Yoon proposed a welfare-for-all policy, presenting the Northern European model as Korea’s best direction. To achieve this goal, Yoon said, several prerequisites are needed including sustainable economic growth, an organized, leftist political party and strong trust between the government and the people.

“We need an expansion of the social awareness that we are all in the same boat,” he said.

Conservative participants said it is inappropriate to compare Korea’s situation with other advanced countries. Warning that Korea is headed down the path taken by countries in Southern Europe - of paying less while receiving more - Nam Sang-ho, a researcher at the Korea Institute for Health and Social Affairs, pointed out that Korea has high defense expenses and an underdeveloped pension system, unlike many other countries.

“We must be careful about rapidly expanding our welfare spending to the level of OECD countries,” said Nam. “We should also be cautious about taking out loans to offer welfare benefits.”

He also said populist pledges by politicians hinder a true social consensus on welfare.

The liberals and the conservatives agreed that tax hikes will be required to finance wider welfare, but they differed on the specifics.

Professor Yoon of Inha University said a welfare-for-all policy is impossible without financial support. “Everyone must pay, but the rich must pay more,” he said. “We must respect the principle of progressive tax hikes.”

Professor Moon Jin-young of Sogang University, an expert on welfare, said the time has come for the country to think about increasing the value-added tax rate, which has not been changed since its introduction in 1977, to finance the welfare policy.

The general public, however, thinks differently from the experts on who should pay for more welfare benefits.

According to the survey by the Korea Institute for Health and Social Affairs, 57 percent said they agree with the idea of a tax hike, but a majority of the public - 68 percent - said tax rates should be increased for the rich and the chaebol to finance wider welfare benefits.


BY SPECIAL REPORTING TEAM [myoja@joongang.co.kr]

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