The Economic Crisis and the Politics of Welfare Reform in Korea

While many OECD countries have tried to reduce the size of their government and social spending in particular, the welfare states in East Asia have expanded the scope and commanded an increasing bulk of their public financing. The governments in this region have begun to take active responsibility for social welfare in recent years (Eto 2001; Goodman et al. 1998; Kuhnle and Hort 2000; Kwon 2001). This trend has been further strengthened after the Asian economic crisis of 1997–98. In particular, Korea, one of the victims of the crisis, has witnessed the rapid expansion of the welfare state since the economic crisis. The Employment Insurance Programme has been extended to small-scale workplaces to cover the newly unemployed amidst the economic crisis. Emergency public works programmes have been implemented to create jobs for the low-skilled workers who would otherwise have been unemployed with no social protection. The Korean government has also introduced a new income support programme for the poor. This programme, the Minimum Living Standard Guarantee (MLSG), will give benefits to those below the poverty line, which has increased to a much higher level than previously defined. It also aims to cover the wider population of the poor. The health care system was also reformed during the period 1998–2000. A quasi-governmental agency was set up to manage integrated National Health Insurance, and the functional division of health care professionals, notably between physicians and pharmacists, was redefined. The question arising from this observation is why Korea has extended its welfare state, at a time when neo-liberal ideology has been predominant in public policy discourse in Korea and abroad.