Economic Crises and the Welfare State in Korea: Reforms and Future Challenges

Abstract

East Asian countries have been hit yet again by economic crisis, this time of a global nature, after having endured the Asian economic crisis of 1997–98. Social protection for the weak in society during the crisis poses a great policy challenge. This paper examines Koreas social policy responses to these economic crises in the context of the evolution of the welfare state. Faced with the economic crisis of 1997–98, the welfare state was extended and strengthened in terms of coverage and benefits in order to facilitate labor market reform. In the current global economic crisis, social policies such as public assistance and unemployment benefits, together with extra job-retaining measures that the government put into place, have enabled Korea to respond much more effectively to social risks arising from the crisis than it did during the earlier Asian crisis. However, it is imperative for Korea to further strengthen the welfare state, particularly in the areas of social services for children and the elderly, in order to maintain its economic potential in the face of dramatic demographic transitions and changes in family structure that are likely to occur in the future.