Without jobs, the welfare state is but a pipe dream
“Sweden is not a country to simply follow, but Sweden’s history is worth considering as one of the alternatives for Korea,” said Choi. He said that without economic growth and the creation of jobs, welfare heaven would have been impossible. He explained that Sweden was able to generate tax revenue through economic development. Regarding issues of low birth rate and gender equality, he argued that maternity benefits are not effective in the long run, and said that unmarried couples who live together should be legally accepted. He also pointed out that Korea is too obsessed with the past, and should think about how it will face the future.
JoongAng Ilbo interviewed Choi, who visited Korea recently, and continued the discussion by email after returning to Sweden.
Below are edited excerpts of our interview.
Q. Korea is a low-tax, low-welfare country. How did Sweden achieve high tax and strong welfare?
A. What is most important in welfare is creating jobs. Those who are socially marginalized or are in a low-income group do not have jobs, and even if they have one, their wages are too low. Sweden’s Social Democratic Party emphasizes the greatest welfare is providing jobs to people. When people find a job, they can pay taxes, and through taxes, government welfare can be financed. If the labor market collapses, welfare funding declines, which means the continuity of welfare is difficult. A trustworthy administrative system is necessary. That is why balanced and sound tax reform is a must for welfare.
If taxes are raised at once, the public will object.
Sweden did not raise its taxes all at once. Before the 1970s, the tax rate was 30 percent, one of the lowest among European nations. Since then, the tax burden has become 50.1 percent, the highest in the world. It has now fallen to 43 percent, but still is seventh in the world. The reason why people had to pay high taxes suddenly in the 1970s was because the economy grew. The Social Democratic Party first ruled in 1932 and continued to rule until the 1970s for 40 years, and recorded high economic growth. Because economic growth provided support, the government could promise its people good welfare. What is crucial is that growth and welfare have to go together. If the nation does not grow, no finances are available to take care of the people.
According to statistics, 48 percent of Korean workers do not pay taxes at all.
Sweden has a low tax exemption limit, so only a few people do not pay tax. The process is that if people pay, they get it back. If the country is well-functioning, the government should be responsible for its people, and people should comply with their obligations. Low-income groups can have their tax back through a social safety net. The awareness that both the government and people are taking responsibility for financing welfare is very important. Sweden collects taxes based on fairness and transparency. The core of a sustainable Swedish welfare system is creating and keeping a balance between responsibility and obligation. The most trustworthy public institution in Sweden is the National Tax Authority, and the second is the Swedish Pension Agency. This is proof that tax is collected based on transparency and equity.
Many criticize pork-barrel spending.
If it has to be done, universal welfare can be appropriate and selective welfare can be delivered when necessary. It is desirable to implement universal and selective welfare simultaneously. Although it is important to be equipped with a social security network, being able to continue it is also important. Benefits for the aged in Sweden were based on universal welfare in 2001 before reform, but now the system has changed to selective welfare where people get as much as they contributed. Child endowment and maternity benefits are welfare based on cash. The maternity benefit introduced in 2014 was effective in the short run, but the long-term effect was small so it disappeared in 2017. Welfare based on providing cash is not recommended. The better solution is expanding sustainable institutions that can last long.
The Korean government has invested trillions, but the low birth rate has become a serious issue.
The effect of providing cash is only temporary, and it comes with side effects. There are many measures that could be done when a population decreases due to the low birth rate. Although it has side effects, one of the easiest ways is to permit the inflow of workers. That is, allowing immigrants and refugees to come. Not only immigrant laborers be accepted but also the highly educated. Sweden has actively accepted refugees, and now 20 percent of the population were born outside Sweden.
Lately, more people are reluctant to get married.
If living together has become a social phenomenon, we have to accept it. Instead of becoming a society that forces people to marry, the law and institutions should change. If children only born after marriage are considered normal and children born before marriage are called “extramarital,” it is a problem. We need to bless the birth of a being without discriminating against children based on how they were born. Just as adultery has disappeared, the marriage law should be reformed. In Sweden, there is no distinction between the baby being born after marriage and before marriage. If a child is registered at birth, a wide range of benefits are received, including a baby bonus, a mother bonus and maternity leave. It means the government acknowledges the couple as husband and wife. If they have a certificate showing that they live together, they are registered and receive all social welfare benefits and legal protections. Unlike married couples, they do not have the right to divide their inherited properties. Korea has to recognize couples that live together as legal from now on.
Mothers who work say that the reason why they avoid getting married and having babies is because it is hard to both manage work and child-rearing at the same time.
Korean women are not having babies because they cannot predict the future. Everything, including institutions, culture and even customs, has to be transformed completely. At home, husbands and wives have to assume gender roles equally. But what is more important is the workplace. The culture in the workplace should be fixed. For instance, if children are sick, mothers are always the one who take care of them. In addition, the drinking culture lasts late until night and daily life is oriented too much on work. All of this has to change. If 24 hours a day is divided into three, eight hours should be for sleep, eight hours should be spent in the workplace and the remaining eight should be for oneself or with family. Sweden makes sure that children would not be an obstacle for a mother’s future and work. From the moment a mother is pregnant and goes on to give birth to, raise, educate and send her child to college, the government does not burden or force parents to sacrifice [their well-being]. That is why people say that Sweden’s welfare covers the entire life of a person — from fetus to grave.
The conflict between the sexes is serious as well.
In Sweden, beyond pursuing gender equality, people have not classified themselves according to gender for a long time. Men and women go to the same restrooms and saunas and they are not differentiated in schools. Men and women share the same rights and responsibilities. People over 18 years of age have to go to the military. Women also have to abide by the obligatory military service. Military service lasts for a year, and if women want, they can be combat troops. Korea now has to build a foundation for gender equality.
BY CHANG SE-JEONG [email@example.com]