26.3 Percent of Those Whose Income Was 30 Percent or Less of the Standard Median Income as of 2018 Was Not Covered by Korea’s Social Security System
- Date 2021-07-06
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An analysis of the Korea Welfare Panel Study by KIHASA found that 7 to 8 percent of the total population had been left out at least once of social security coverage over the past 4-year period from 2015 to 2018
26.3 percent (about 400,000 people by estimation) of those who earned 30 percent or less of the standard median income in 2018 was not covered by Korea’s social security system according to the Survey of Household Finances and Living Conditions released by Statistics Korea.
Factors contributing to the worsening of income distribution in Korea include population aging and changes in the family structure; the dual structure of the labor market; and distribution problems related to wealth distribution and wealth inequality.
Korea’s social security system may look well-established, but there are gaps still existing.
-Some of those incapable of working among those earning 30 percent or less of the standard median income did not receive livelihood benefits due to statutory supporter and asset criteria provisions. *Starting from 2022, the statutory supporter criteria will be eased for livelihood benefits, but they will remain tight for medical aid.
-There is almost no cash support for those incapable of working among those earning 30 to 75 percent of the standard median income.
-Those aged 65 and older are receiving national pension and basic state pension, but with the low levels of the payments, Korea’s elderly poverty rate is the highest in the OCED. People with disabilities are receiving disability (child) benefits and disability pension, but their payment levels are as low as what older people are receiving as state pensions.
The Survey of Household Finances and Living Conditions by Statistics Korea found that 26.3 percent (400,000 people by estimation) of those who earned 30 percent or less of the standard median income as of 2018 was not covered by the social security system.
-The proportion of those who was left out of the social security system was 15.9 percent among those earning 30 to 40 percent of the standard median income, 22.6 percent among those earning 40 to 50 percent of the standard median income, and 29.3 percent among those earning 50 to 60 percent of the standard median income. This means that 20 percent of Korea’s population earning 60 percent or less of the standard median income was not supported by the country’s social security system.
-Among those earning 60 to 75 percent of the standard median income, 38.2 percent, and among those earning 75 to 100 percent of the standard median income, 53.4 percent were not covered by the social security system.
-To sum, among half of the population who have income below the standard median income, approximately 7.9 million people were not benefiting from the social security system.
According to the Korea Welfare Panel Study by the Korea Institute for Health and Social Affairs, the number of people who had been continuously affected by gaps in the country’s social security coverage over the 4-year period from 2015 to 2018 was 312,000, and the number of those who had experienced the gaps at least once over the same period of time was 3.52 million.
-The number of those who had been left out of the social security system more than once over the four-year period was 3.83 million. 7 to 8 percent of the total population (when the total population was assumed to be 50 million) had been left at the risk of being excluded from the social safety net.
There is a need to transform the current life-cycle-based social security system into a categorical social security system (a tentative name) based on age (life-cycle) and work capacity. The new categorical social security system should be a multi-tier system that covers all the population and minimizes duplication between different social security programs.
-The new system should support the elderly who have income lower than 30% of the standard median income with basic livelihood benefits and basic pension and support the elderly who have income in the range of 30 to 50 percent of the standard median income with supplemental benefits.
-Income support for healthy elderly people can be provided with basic pension, jobs for the elderly, or supplemental benefits. A National Pension reform can be carried out to establish an income safety net for the future elderly people. Income support is needed for those excluded from the National Pension plan such as full-time homemakers.
-Support should be given to strengthening the income and employment safety nets for the working-age population by introducing a livelihood security system and enhancing employment services.