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Strengthening Social Cohesion in Korea

image of Strengthening Social Cohesion in Korea

Korea is confronting a serious challenges. It has to improve income equality in the context of a severe demographic transition. Such a transition, from one of the youngest populations in the OECD at present to the second oldest by 2050, may boost the need for public spending and slow economic growth. In this context and as the pace of population ageing is accelerating, it is important to act quickly in a wide range of areas:

-Policies to sustain Korea’s growth potential in the face of falling labour inputs;

-Measures that improve both growth and equality;

-Carefully-targeted increases in social spending to reduce inequality and poverty;

-Financing higher social spending, with priority given to a reform of tax and social security that minimises the negative impact on output growth.

Against the background of these broad challenges, which are discussed in a specific, setting-the-ground, Chapter, the report suggests policy options, based on the practices and reforms of other countries, in the following four areas: I) Income Distribution and Poverty; II) Tackling the Duality of the Labour Market; III) Early Childcare; and IV) Moving beyond Hospitals to better Care in the Community.

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Income distribution and poverty among the working-age population and implications for social welfare policies

This chapter looks at the implications of social welfare policies in income distribution and poverty among the working-age population. Korea has an institutional framework capable of providing an effective safety net for the working-age population. Yet, Korea’s poverty rate is high by international standards and its tax/benefit system is one of the least effective among OECD countries in reducing income inequality and in alleviating poverty. To strengthen social cohesion and have a significant effect on poverty alleviation, the challenge for policy reform will be to extend the reach of the three main pillars of the safety net and take measures to improve the accessibility for those whose circumstances result in family income below the poverty threshold; strengthening the employment orientation of the support provided to those who have work capacity; and undertaking systematic and regular monitoring and evaluation of programmes.

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