Strengthening the social safety net in Korea
Social protection in Korea is designed around traditional forms of employment and
excludes a substantial share of workers in non-standard employment. The resulting
social protection gaps compound income inequality and undermine financial sustainability
as uninsured persons rely on tax-financed benefits. Besides, Korea’s tax and benefit
system discourages taking up or returning to low-paid work from social assistance
or unemployment benefits. Expanding the reach of employment insurance while redesigning
the tax and benefit system could boost work incentives and reduce inequality and poverty.
The elderly poverty rate is persistently high, partly because public pensions and
social insurance were introduced relatively recently. Better targeting the means-tested
Basic Pension could reduce elderly poverty considerably. Lengthening careers is essential
to ensure pension sustainability and adequate retirement income for future retirees.
Shifting from a severance pay system to a corporate pension would help improve retirement
income and lower employers’ incentives to push for early retirements. Reducing inequalities
in access to health and long-term care will require expansion of primary care and
affordable quality home-based care. This will also help address the overreliance on
hospitals and cope with rising demand.
Published on November 30, 2022
In series:OECD Economics Department Working Papersview more titles