Major reform proposals for the National Basic Livelihood Security System were found to be effective in enhancing coverage and reducing poverty, thereby narrowing welfare gaps

• ■Key reform proposals―including adjusting the standard median income, raising the eligibility ceiling for livelihood benefits, increasing the basic deduction rate for earned and business income, and relaxing the asset criteria―have been shown to be effective in strengthening coverage and reducing poverty.
  
  

• ■The increase in the eligibility ceiling for housing benefits has primarily benefited low-income groups above the extreme poor, rather than the extreme poor themselves, demonstrating limited effectiveness in reducing poverty.
  
  

• ■Going forward, it will be necessary to explore ways to normalize the standard median income and to clarify the respective roles of livelihood, housing, and education benefits over the medium to long term. Further reforms, such as easing asset criteria, should also be considered.

KIHASA has published Health and Welfare Issues & Focus, No. 455, titled “Simulation Analysis of the Effects of Major Reform Proposals to the National Basic Livelihood Security System.” The lead researcher is Lee Won-jin, a research fellow at the Social Security Policy Research Department of KIHASA.

According to Dr. Lee, the National Basic Livelihood Security System has steadily expanded in coverage since its transition to a tailored benefit structure in 2015. However, he notes, a series of recent deaths involving individuals left outside the welfare system has led to growing calls to close these gaps and further strengthen the coverage.”

He emphasized the need for more refined policy discussions through simulations of the effects of the major changes currently proposed for the National Basic Livelihood Security System. He said that, in line with this need, this study employed a simulation model based on data from the Household Financial and Welfare Survey to assess the impact of the reform proposals.

He also said, “Raising the eligibility ceiling for housing benefits mainly benefits the low-income group rather than the extremely poor, and thus has a limited impact on poverty reduction,” adding, “Narrowing the gap between the standard median income and the median income from the Household Financial and Welfare Survey, raising the eligibility ceiling for livelihood benefits, increasing the basic deduction rate for earned and business income, and easing the asset criteria have been found to enhance coverage and reduce poverty in the National Basic Livelihood Security System.”

He continued, “Given the very purpose of the introduction of the standard median income, it would be desirable to prioritize raising it to a normal level.” He also argued that, in the medium to long term, it is necessary to re-examine the division of roles among the benefits for livelihood, housing and education within the system, and to consider the development paths of each benefit.

Dr. Lee added, “Since 2015, the requirements related to the legal support obligation have either been abolished or relaxed. However, more targeted efforts are now necessary to close the welfare gaps within the National Basic Livelihood Security System. To this end, policy improvements focusing on easing asset criteria are essential. For example, I believe that raising the allowable limits for residential property and basic assets, and lowering the asset-to-income conversion rate, would improve the poverty reduction effects of both livelihood and housing benefits.”