Explaining Early Welfare Policies in South Korea : Focusing on the Nexus between the State and the Business Sector

Abstract

This study discusses conditions that contributed to creating the coordinated market economy in South Korea, and how that affected welfare policy development as industrialization of South Korea advanced. The study shows that the group-coordinated market economy such as the Japanese or the South Korean political economy would not have been possible without a distinctive role of the state in nurturing the coordinated market economy. In contrast to the industry-coordinated market economy of Europe, the group-coordinated market economy of South Korea had nothing to do with generous welfare state development. A weak union movement and conservative politics based upon the authoritarian state's alliance with big business did not contribute to welfare state development in South Korea. Instead, the state's success in establishing a coordinated market economy through nurturing big companies and cultivating cooperative labor mobilization encouraged the development of company-based social benefits. While company-based cooperative institutions were placed in companies, various corporate benefit programs and health benefits for industrial workers in larger companies further developed. The state established the institutional frame in which employers rather willingly participated in welfare provision for industrial workers. This was accompanied by the lack of state-responsible welfare provision.