Analyses of Social Security Policies
Published on June 19, 2020
Published by Social Administrative Program Evaluation Division, Budget Analysis Department
In 2019, the Korean government announced its 2nd Social Security Master Plan (2019~2023) which presented 12 key tasks in four priority areas of employment/education, income security, health, and social services. In this Plan, the government committed 332.1 trillion won for its 5 year duration in order to strengthen the social security system.
This report aims to examine the current status of social security policies and measures initiated by the Korean government and draw policy implications. It explores major issues related not just to the overall social security system in Korea, but also major social security schemes in specific policy areas such as income security, employment, social services, health, housing, and education, focusing on fiscal sustainability, coverage, efficiency of delivery mechanisms, and effectiveness of projects.
The policy implications from the analysis are as follows. First, social consensus on how to raise financial resources to cover the expanding costs of social security is needed. Korea's social security spending is increasing faster than total central government spending. The rate of increase is relatively steep when compared to other OECD countries. This hike in social security expenditures is expected to continue for the foreseeable future, due to the ageing society and maturation of social security systems.
Also, the government should find ways to manage the fiscal situation of social insurance in an integrated manner. Despite concerns over its fiscal sustainability, fiscal outlooks are conducted for each social insurance scheme, making it difficult to comprehensively diagnose and respond to the overall fiscal situation of social insurance schemes.
In addition, some people are either voluntarily or involuntarily not covered by social insurance, which resulted from non-subscription, exclusion from coverage (National Pension Scheme), insurance premiums in arrears for extended periods of time (National Health Insurance), and concealment and non-reporting of insurance accidents (Worker’s Compensation Insurance). Thus, in order to reduce these blind spots, the government should devise appropriate responses for each insurance scheme, such as expansion of subscription targets, insurance premium support, and increase of detection rates for concealment and non-reported cases.
Furthermore, while strengthening the social security system, stronger supervision of service providers as well as more stringent recipient management, etc. are needed in order to prevent fraudulent benefit reception and false claims.
Lastly, there are other issues for further improvement addressed in each policy area: support measures for long-term recipients of Livelihood Benefits (income security), long-term job policies in response to changes in the labor market structure (employment), clear division of roles between nursing hospitals and long-term care facilities (social services), management of the growth rate of medical expenditures (health), improvement of equity in the actual benefits of housing welfare (housing), and review of whether or not fiscal allocation by area of education conforms to changing educational needs (education).