THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s: THE RATCHET EFFECT A
제 목: THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s: THE RATCHET EFFECT AND THE SUSTAINABILITY OF NEW WELFARE POLICIES(한국의 공공복지의 정치: 역진억제 효과와 복지 개혁의 지속성)
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 59
THE POLITICS OF PUBLIC WELFARE IN
SOUTH KOREA, 1990s-2010s: THE RATCHET
EFFECT AND THE SUSTAINABILITY OF
NEW WELFARE POLICIES*
1)
Park, Sung Ho | Yonsei University
| Abstract |
This article explores a partisan and electoral dynamics of recent welfare expansion in South
Korea (thereafter, Korea). Existing studies explain how and under what circumstances major
welfare expansion occurred in the late 1990s and the 2000s by referring to the changing
power relation between conservative and reformist parties. Little attention, however, has been
paid to another important aspect of the reform dynamics: how and under what circumstances
new welfare policies were sustained once they were introduced. The article answers the
question by drawing on the notion of ratchet effect of welfare reform – which has been widely
developed and tested in the literature of welfare policy feedback in advanced democracies.
The article finds that once new policies were introduced, political parties found it electorally
risky to withdraw from the policies because these efforts would likely trigger electoral
setbacks from social risk groups whose interests were actively advocated by pro-welfare civil
society organizations. Such an electoral consideration made not only pro-welfare reformists
but the conservatives – who had been rather hostile to welfare expansion – more
conciliatory to the new policies.
Key words | social welfare, new social risk groups, policy feedback, Korea
* This work was supported by the National Research Foundation of Korea Grant funded by
the Korean Government (NRF-2014S1A5A8019543).
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1. INTRODUCTION
The topic of welfare reform has been explored extensively in the political economy
literature of advanced democracies. While existing studies have been mostly
interested in Europe and North America as core examples of advanced democracy
(Armingeon and Bonoli eds. 2006; Bonoli and Natalie eds. 2012; Palier ed. 2010;
Pierson ed. 2001; Scharpf and Schmidt eds. 2000), there has been a growing interest
in East Asia which has exhibited somewhat different, but still comparable stories of
reforms. Korea – along with Japan – has been among prominent cases in this
regard (Estevez-Abe 2008; Kwon ed. 2005; Peng 2004; Rosenbluth and Thies 2010;
Yang 2013).
While social welfare in Korea used to be examined with certain particularistic or
region-specific, rather than general comparable perspectives (Holliday 2000; Jones
1993; Kwon 1997), many new studies have taken a different approach when they
examine the changes that occurred in recent decades. These studies have found that
the welfare system in Korea became more universalistic, by reducing or recalibrating
major benefits for traditional welfare insiders while simultaneously expanding public
services and other benefits that would serve new groups of populations that the
preexisting welfare system did not cover – that is, new social risk groups who lived
in insecure life conditions outside the core labor market and traditional family
structures (Kim 2006; Peng and Wong 2008; Yang 2013).
The article aims to explore this expansionary side of recent welfare reforms in
Korea. Existing studies have identified several structural and ideational factors
responsible for the changes, including globalization, post-industrialization, population
ageing, the decline of the stable family structure, and an emerging social consensus
towards employment-friendly welfare (Lee and Park 2003; Peng 2005; Shin 2000;
Wong 2005). Studies have also explored various political mechanisms which linked
these background factors to final policy outcomes. For instance, emphasizing on
electoral and partisan dynamics of the reforms, they have argued that serious welfare
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 61
expansion occurred when the conservative party suffered from major electoral
setbacks and, as a consequence, pro-reform voices seized favorable momentums for
universal welfare reform (Haggard and Kaufman 2008; Kwon 2005; Peng and
Wong 2008; Shin 2000). Still, others have highlighted the roles of macro-political
institutions, such as electoral formula and executive-legislative institutions (i.e.,
presidentialism vs. partiamentarism), examining how these factors affected strategic
considerations of political parties who were involved in major reforms (Song and
Hong 2006; Yang 2013).
The article builds on these studies on the political determinants of welfare
expansion in Korea, and especially those which have focused on the electoral and
partisan dynamics of the reforms. Although these studies are well suited for
explaining how and why new welfare policies were introduced by referring to the
relative electoral performances between conservative and reformist parties, the article
argues, they pay little attention to another important dimension of the reforms: how
and why such policies were sustained once introduced. The article provides an answer
by drawing on a notion of ratchet effect of welfare reform which has been widely
theorized and tested in the literature of welfare policy feedback in advanced
democracies. The rationale runs as follows. Once new policies are initiated, it
becomes electorally risky for political parties to withdraw from the agenda. In
particular, those voters who benefit from new policies will be mostly critical of any
counter-reform efforts. Such electoral pressures promote a broad cross-partisan
consensus for sustaining the reform among major political parties.
The article is organized as follows. It first overviews the existing literature of
welfare reforms in Korea and other advanced democracies to provide a solid
theoretical and empirical ground for the analysis. It presents and examines a core
political argument – i.e., the ratchet effect of welfare reform – in a context of
welfare expansion which occurred in Korea through the late 1990s and the 2010s.
In the conclusion, the findings of the study will be summarized along with their
implications for a broader scholarship on welfare reforms in advanced democracies.
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2. THE POLITICS OF WELFARE EXPANSION IN KOREA
Until the recent past, the notion of the ‘East Asian model’ was widely accepted
in the studies of social welfare in Korea (Goodman and Peng 1996; Holliday 2000;
Kwon 1997; Wade 1990). Emphasizing a Confucian heritage or state
developmentalism in Korea (Goodman and Peng 1996; Holliday 2000; Jones 1993;
Kwon 1997), the studies highlighted a full of unique characteristics in the Korean
welfare system which were rarely seen in most other cases of advanced democracies.
Among the widely cited features were slim and stratified social insurances, slim
public service and assistances, various company-level welfare benefits, and life-long
employment (Chung 2007; Manow 2001). In combination, these features produced
a welfare system which heavily favored those workers (and their families) who existed
inside core public and private economic sectors, while leaving out all other
populations (Kwon 1999; Wade 1990).
In recent years, studies have taken a different approach to the social welfare in
Korea. They have noted that important changes occurred in the late 1990s to 2000s,
which made welfare benefits more universalistic. Social insurance benefits – which
had mostly favored those populations with medium-to-high incomes with job security
– were reduced or recalibrated, whereas other benefits for new social risk groups
(such as women, the aged poor, the working poor, etc.) increased by means of
various social insurance reforms and provision of public services and other
means-tested assistances (Kim and Guak 2011; Peng and Wong 2008). With these
changes, the Korean government not only improved the fiscal sustainability of
existing social insurance benefits, but also made the whole welfare system more
equitable by expanding new benefits to those populations who were placed in
peripheral life conditions. (Shin 2000; Song and Hong 2006; Yang 2013).
The article builds on this overall assessment of welfare reforms in Korea, and
focuses more on the expansionary side of the policy reforms. To account for such
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 63
changes, existing studies have found various structural conditions that provided
strong pressures for expansionary reforms. Globalization, along with a large-scale
external economic crisis as occurred in Korea at the turn of the century, expanded
social demand for public welfare by increasing the number of citizens whose life
became vulnerable under a new open economy (Shin 2000; Song 2003; Yang 2000).
Other structural changes – such as post-industrialization, female labor force
participation, population ageing, the decline of the stable family structure – added
further to this pressure by reducing the size of the core populations who supported
traditional welfare benefits, while increasing the number of peripheral populations
who were not covered by existing benefits (Lee and Park 2003). Last but not least,
an ideational consensus for inclusive welfare reforms – which was promoted by
various civil organizations such as social media and voluntary civil groups – also
facilitated welfare expansion by mainstreaming the new reform agenda into public
policy debates (Wong 2005).
Studies have also explored diverse political mechanisms which played important
parts in mediating those structural pressures toward final policy outcomes. Here one
influential account examines the role of partisan and electoral competition among
political parties, in particular paying close attention to the changing electoral fortune
of the conservative party in Korea. The dominance of conservative voices had been
the main feature of the Korean politics throughout the post-war periods. Entering
the late 1990s to the 2000s, however, a series of political earthquakes resulted in
the conservative party losing its dominant position in the national political scene.
Considering that the party had long favored the status quo of the existing
particularistic welfare system, the decline of its political power – coupled with the
ascendance of pro-reform voices from opposition parties and other civil organizations
– created a strong political momentum for welfare expansion (Kwon 2005; Peng
and Wong 2008; Shin 2000, 2001a).
Meanwhile, other studies have emphasized a role of macro-political institutions in
the reform politics. In their efforts to examine how such institutions intervened to
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shape strategic considerations of political parties, those studies have found various
evidence that worked against welfare expansion. For instance, the simple plurality
rule in Korea produced an institutional bias against universal welfare expansion by
motivating political parties to reinforce their personalistic rather than general
programmatic ties with citizens. A check-and-balance mechanism, as featured in the
Korean presidential system, also produced a similar dampening effect. Often
resulting in political deadlocks between the legislative and executive branches, the
system made it difficult for even reformist governments to focus on their agenda
on welfare expansion (Song and Hong 2006; Yang 2013).
3. THE RATCHET EFFECT AND THE SUSTAINABILITY OF
NEW WELFARE POLICIES
1) Assessment of Existing Accounts
The article revisits these recent studies on the political determinants of welfare
expansion in Korea. Focusing on the studies which have explored the partisan and
electoral dynamics of the reforms, the article aims to further improve their
explanatory power. It first acknowledges that existing partisan and electoral studies
have contributed to our understanding on the dynamics of welfare expansion,
especially on why major welfare policies were introduced. To answer this question,
the studies have mostly relied on classic partisan theory of party behaviors (cf.
Haggard and Kauffman 2008) – which asserts that political parties compete on
social policies by drawing on their relatively fixed partisan preferences (Allen and
Scruggs 2004; Amable, Gatti, and Schumacher 2006; Korpi and Palme 2003).
Building on this perspective, the studies have presented a testable hypothesis which
attend to the changing power relation between conflicting partisan forces (Kwon
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 65
2005; Shin 2000; Yang 2000). A considerable power shift toward reformist political
parties and civil organizations occurred in the late 1990s, which put the voices for
welfare expansion on a more favorable political ground. Major reform events then
occurred following the initiatives of these pro-welfare voices. Even conservative
politicians were pressed to introduce or support similar measures, reflecting the new
political reality.
While such account explains why major welfare expansion occurred in Korea, it
does not tell us much about why the new policies were sustained thereafter. Various
case studies have confirmed that new welfare policies, which were introduced under
two reformist governments (1998-2007), continued to maintain their core features
in following years to come (Joo 2008; Kim and Kim 2012; Kim and Lee 2015;
Kim and Nam 2011; Lee and Kim 2016; Lee and Park 2015). True, the present
study covers only a limited time period (namely, it covers only several years or more
until the mid-2010s since the new policies were introduced) and cannot answer how
longer those policies will remain in the future. But the years that those policies
survived were when the conservative party came back in power, and the existing
partisan/electoral studies do not seem to provide a plausible explanation of how the
policies survived these arguably hostile periods of the conservative rule.
2) Core Arguments and Contributions
The article addresses this challenge faced by existing partisan/electoral studies, by
adopting an alternative framework of party behavior, i.e., rational partisan theory.
It argues that political parties adjust their partisan preferences constantly to meet
the requirements of electoral feasibility (Garrett 1998; Muller and Strom 1999).
Widely accepted in the studies on welfare reforms in advanced democracies
(Armingeon 2006; Bonoli 2001; Gigger and Nelson 2010; Pierson 1994), the
perspective is logically compatible with the existing partisan accounts of welfare
expansion in Korea, which find that major welfare expansion occurred when
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pro-welfare reformists seized an electoral momentum to push for their preferred
agenda. More importantly to our study, the alternative perspective is well suited for
explaining how new welfare policies were eventually sustained.
More specifically, the article presents a testable hypothesis for reform sustainability
in Korea. Called a hypothesis of ratchet effect, it builds on the notion of welfare
policy feedback which predicts that certain policies, once adopted, create broad
beneficiary groups who support the policies and also press politicians in the same
direction by making it electorally risky to repeal the policies (Huber and Stephens
2001; Pierson 1994). Looking more closely at how such dynamic effect worked in
Korea, once new welfare policies were introduced, they became very popular among
a broad range of social risk groups (such as the poor elderly, women, the working
poor, and young families). Political parties were therefore concerned that any efforts
for deviating from the established policy path would likely invite massive electoral
backlashes from the newly emerging constituencies. Considering that the size of these
populations was growing fast in the wake of globalization, post-industrialization,
female labor force participation, demographic changes, etc. (Lee and Park 2003), no
major parties could feel immune to this social pressure.
Such political consideration became even more prominent when various pro-reform
societal organizations, such as social media and voluntary civil activist groups, were
actively involved in the reform process. As external advocacy forces to social risk
groups, they provided a strong ideational ground for welfare reform. They in
particular criticized traditional welfare policies for not only being fiscally
unsustainable, but also being normatively unjustifiable by leaving many vulnerable
people uncovered (Kwon 2005; Wong 2005). Once new welfare policies were
introduced, those voices of pro-reform groups gained more solid ground as they
witnessed the merit of their claim in the real life experiences. Politicians also became
more attentive to their voices, finding it electorally costly to deviate from the new
policies.
Under these circumstances, not only did the hitherto pro-welfare parties continue
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 67
their emphasis on the major reform path, but also conservative politicians who had
been less sympathetic to the welfare expansion began to change their position in
favor of it – a clear indication that the classic partisan perspective did not work.
While in some cases conservative politicians did attempt to undo the welfare
measures, their efforts did not last long. Instead, they began lending active support
for the reform agenda by joining in the search for feasible specific solutions for
welfare expansion.
Their changing attitude became evident when they suffered from major electoral
defeats. To avoid further deterioration of electoral popularity, the conservatives were
desperate not to jeopardize the reform process that was set with the rise of
pro-reform voices. Even more striking was that the conservatives’ position did not
change when they returned to power with their enhanced electoral popularity. Given
their improved power position, conservative politicians could have used the
momentum as an opportunity to revive their traditional partisan approach. However,
this scenario was not realized. Understanding that any attempt at rolling back the
new reform measures would likely invite major setbacks from various risk groups
– which in turn would dampen their general electoral popularity, conservative
politicians did not return to their traditional agenda. Instead, they took only a
moderate partisan approach whereby they stayed with or, sometimes, even actively
promoted existing reform policies while refusing to pursue further agenda.
It should be noted that there are precedents in the existing scholarship which
adopted the same notion of policy feedback to account for the politics of public
welfare in advanced democracies. Pierson (1994), for instance, applied it in the
context of welfare retrenchment in recent decades, explaining why it was difficult
for political parties to cut income-transfer policies for core welfare recipients even
when significant cutbacks seemed unavoidable. More recent experiences in the 2000s
and 2010s seemed to challenge his thesis, demonstrating that many governments
in advanced democracies finally began to embrace the reform agenda in order to
take credits for tackling enormous fiscal challenges that social insurance programs
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had faced (Armingeon and Bonoli eds. 2006; Bonoli and Natalie eds.2012). These
episodes tell us that, once retrenchment was conceived unavoidable by most citizens
and politicians, the feedback effect began to be overshadowed by other forces to
overcome the status quo.
However, the feedback hypothesis still worked well for accounting for welfare
programs in the phase of welfare expansion, rather than retrenchment. Huber and
Stephens (2001), for instance, applied the notion to the cases of welfare expansion
in the post-war Europe. They demonstrated that, once new welfare policies were
introduced, political parties with different partisan ideologies were electorally
motivated to continue or expand the policies in efforts to solicit support from voter
groups who began to benefit from the policies. While the present study builds on
this same idea of welfare feedback in the phase of welfare expansion, it provides a
distinctive take on the issue as follows.
While Huber/Stephens (also, Pierson) dealt with welfare policy feedback in the
contexts where core mainstream workers, active or retired, from well-established
labor market (namely, those workers from major private manufacturing and public
service sectors) played a primary role, this article examines the same feedback in a
different context of a post-industrial economy – where voices from various risk
groups from outside the core labor market are taken into account (Armingeon and
Bonoli eds. 2006; Bonoli and Natalie eds.2012; Hausermann 2010). While these
voters exhibit strong preferences for public welfare to address their disadvantaged
economic situations (Blekesaune and Quandagno 2003; Svallfors 2006), they
nevertheless have serious challenges in making their voices heard. Compared to
traditional welfare insiders, who exhibited a strong capability of collective action and
electoral mobilization by relying on strong organizations, various privileges from the
management of major welfare programs, and strong ties with political parties, new
risk groups do not benefit from these advantages. They are heterogeneous in
composition, diffuse in organization, and marginalized by the existing welfare system
(Armingeon 2006; Hausermann 2010; Van Kersbergen and Vis 2013, 155-159).
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 69
Under these circumstances, pro-reform civil organizations as external advocates to
social risk groups play an important part in mobilizing social support for the
disadvantaged groups. They can contribute to formation of a coherent policy
coalition for policy reform. They also can expand the policy consensus for new
welfare policies, by normatively legitimizing the reform agenda over the status quo
in various policy debates. To the extent that such involvement is in effect,
electorally-sensitive political parties will more readily appreciate the political
importance of the policies at issue. This article traces this distinctive feature of policy
feedback in a post-industrial society, analyzing the interaction between political
parties and pro-reform civil organizations as the focal point of the policy feedback.
4. RESEARCH STRATEGY
This section outlines the research strategy that the article employs to demonstrate
the validity of the ratchet effect hypothesis as applied to the Korean case of welfare
expansion. First, it covers all major events of welfare expansion that occurred during
the late 1990s and the 2010s, although only selected cases will be given closer
attention. To provide a more rigorous empirical analysis, it also examines the ratchet
effect hypothesis in explicit comparison with a potential alternative hypothesis which
provides a different causal account for reform sustainability. This latter hypothesis
is drawn from the classic partisan framework, the dominant approach thus far in
the study of the electoral dynamics of welfare expansion in Korea. While having
been employed to explain why new welfare policies were introduced, the framework
nonetheless presents a plausible implication for the question of reform sustainability.
Namely, it suggests that new policies will survive or demise depending the relative
power distribution among the political parties involved. If pro-welfare reformists
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continue to maintain a stronger electoral position, the policies will remain in effect.
If conservatives regain power, however, the policies will be repealed or, otherwise,
be modified for significant cutbacks. The implication is that there will be no such
room for the ratchet effect to play out in the reform process.
In testing these competing hypotheses, the article presents the following
substantive analysis. It first identifies the initial policy preferences held by the
conservative and reformist parties as regard public welfare. It then explores how these
preferences were affected once new welfare policies were introduced. If it turned out
that the parties indeed adjusted their original preferences to the new reality, the
hypothesis of ratchet effect will be confirmed. If the parties still maintained their
original preferences, then the alternative hypothesis will be given more validity.
1) The Focus of Analysis
In pursuing the empirical analysis, the author pays particular attention to the case
of the conservative party, which called Democratic Liberal Party (1990-1995), New
Korea Party (1995-1997), One Nation Party (1997-2012), or Saenuri Party
(2012-2017), depending on time periods. This party provides a case whereby the
ratchet hypothesis and the alternative classic partisan hypothesis present conflicting
expectations: the former expects a change in the party’s preference whereas the latter
does not. Meanwhile, the case of reformist parties do not carry as much analytic
importance. Both hypotheses will present the same prediction (although for different
reasons) that reformists would stay with their initial emphasis on welfare expansion
– a point which has been confirmed repeatedly by many expert studies (Kim and
Guak 2011; Seon 2005).
Interestingly enough, the conservative party faced diverse electoral fortunes
throughout the reform process. When new welfare policies were introduced, it
suffered from electoral setbacks. Later, it recovered popularity and managed to return
to power and stay there toward the end of the periods that the present study
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 71
examines. These changing electoral configurations provide an ideal ground for testing
the ratchet hypothesis against its alternative. The former predicts that the
conservative party would start to change its preference on social welfare and hold
the new idea even after it recovered electoral power. The alternative hypothesis
however expect that the party would stay with its initial preference. Even if the party
happened to agree with expansionary welfare policies, it would have done so because
the lack of power vis-à-vis its competitors forced to do so. As soon as the party
recovered power, it would return to its original position.
2) Controlling for Other Hypotheses
To further ensure the validity of the empirical analysis, this section refers to
existing studies to control for other plausible alternative explanations for the reforms.
First, it is possible that a series of structural changes in society and economy –
such as globalization, post-industrialization, demographic change, and family change
– could have affected the reforms by generating a broad consensus for welfare
expansion among major political parties. While not denying this potential
intervening effect, the author emphasizes that these pressures have been on a steady
trajectory since the 1980s (Kwon 2005; Lee and Park 2003; Peng 2004) – meaning
that they cannot provide a sufficient explanation for the timing and specific dynamics
of welfare expansion. In particular, they cannot explain why and how the
conservative party began changing its preference in the late 1990s and maintained
the new idea thereafter.
The article also addresses another potential claim that welfare insiders (such as
core workers and other organized welfare beneficiaries) and other government
bureaucrats could have intervened in the reforms by affecting the policy preferences
of political parties over social welfare. The author however casts doubt on this
possibility on the following grounds. First, core welfare programs in Korea had been
only narrowly focused on certain target groups – such as public employees, teachers,
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and male workers in big businesses (Chung 1996; Kwon 1999; Shin 2001a). As a
result, these small-sized insiders could not form strong voices when political parties
embarked on major welfare reforms in the late 1990s and 2000s to address various
emerging social risks (Shin 2000; Yang 2013). Government bureaucrats, who once
had played an important role in policy making, also lost much of their power to
politicians in the course of intense electoral competition and social mobilization which
occurred in the 1990s and 2000s (Ahn 2000; Kim and Kim 2005; Peng and Wong
2008; Wong 2005). All these circumstances suggest that politicians were given
relative freedom when they promoted welfare reform – without being significantly
checked by other possibly omitted players.
Lastly, the article also considers potential influences that macro-political
institutions would have produced in the reform process. As already discussed above
in the literature review section, these political variables played a significant role in
the phase of welfare expansion in Korea (Song and Hong 2006; Yang 2013). It is
therefore plausible that the same institutional variables could also have made
significant differences in the subsequent periods for policy maintenance. For instance,
the presidential system, as an institutional check-and-balance mechanism, could have
produced veto players in the Executive or the Congress, making it difficult for
politicians to seek a change from the newly introduced policies. In reality, however,
these potential interventions did not pose serious challenges to our causal analysis.
Despite the separation of power between the executive and the legislature, the
institutional check-and-balance was not in effect in Korea for most of the 2000s
because the president’s parties mostly maintained a legislative majority. The
personalistic ties between voters and parties which were prevalent in the
plurality-based electoral system in Korea might have played a part in welfare
stabilization, but in a way far from disconfirming the ratchet effect hypothesis. As
discussed in the literature review, the personalistic ties generally discouraged political
parties from pursuing programmatic appeals to voters. At the stage of reform
stabilization, this would imply that politicians would be less interested in maintaining
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 73
universal welfare programs. If we still observe these policies being maintained, it
would then provide a stronger case for the ratchet mechanism at work.
5. THE RATCHET EFFECT AND THE CONSERVATIVE
PARTY’S POLICY CHOICES IN KOREA
This section presents an empirical analysis of welfare policy feedback in Korea.
It starts by identifying the initial policy preferences held by major political parties
regarding public welfare. It explores how these preferences were affected once new
welfare policies were introduced. Focusing on the case of the conservative party and
its government, the analysis confirms that the ratchet effect played an important part
in making new welfare policies sustainable in Korea.
1) The Initial Constellation of Preferences: Conservative vs. Reformist
Parties
The conservative party’s policy position on public welfare had long been rooted
in the notion of particularistic welfare (as predominantly conceptualized with
Confucianism or developmentalism). From this perspective, generous benefits were
provided only for those populations from inside core labor markets (such as those
who were in the public sector and other core economic sectors), while leaving all
others outside the system (Chung 1996; Kwon 1997). In the wake of the democratic
transition in the late 1980s, conservative politicians began changing their approach.
They expanded the coverage of pension and health benefits, and also introduced new
unemployment benefits. All these policies reflected their effort to compensate for
their lack of political legitimacy in the post-transition period (Chung 2007). They
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also hoped that these policies would help moderate the potential social costs of their
new economic project of globalization and liberalization – which they pushed hard
for throughout the 1990s (Yang 2013). One should however note that except for
the case of health care, most social insurance benefits that the conservative party
introduced or extended did not yet provide full coverage for citizens (Shin 2001a;
Woo 2011). In addition, most insurance benefits were set at a residual level. If not,
as in the case of national pension, benefits were set at such an unrealistically
generous level (if compared to contributions) that a major overhaul for significant
benefit cuts became unavoidable when the number of recipients increased sharply
toward the end of the 1990s (Shin 2000; Yang 2000). All these evidences suggest
that conservative politicians were not seriously interested in taking a fundamental
break with the existing system of particularistic public welfare. They rather preferred
only moderate adjustment within the status quo of the system.
Meanwhile, the situation was different for the reformist opposition. Its charismatic
leader, Kim Dae Jung, was known for his life-long commitment to generous welfare
and participatory democracy (Shin 2000; Yang 2000). Under his leadership, the
opposition maintained a close relationship with other major civil organizations, which
lobbied for comprehensive and progressive welfare reform (Kwon 2005). Criticizing
the existing particularistic welfare system for its bias towards small exclusive groups
of core beneficiaries, the opposition searched for more universal welfare which would
cover a vast majority of welfare outsiders with more generous income maintenance
and tax-financed assistance (Peng and Wong 2008, Kwon 2005).
2) Welfare Expansion and the Response by the Conservative Party
As confirmed by exiting partisan/electoral studies, a serious welfare reform began
with the electoral decline of the conservative party and the rise of pro-reform
opposition. Two reformist governments – first led by Kim Dae Jung (1998-2002)
and then by Rho Moo Hyun (2003-2007) – introduced various reform policies.
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 75
They not only aimed at improving the fiscal sustainability of conventional welfare
programs (mostly social insurances), but also sought to make these benefits and other
public services and assistances more available to social risk groups. Looking more
closely at this expansionary side of the reforms, Kim extended the coverage of
pension and unemployment benefits to include virtually all populations. He also
introduced a statutory public assistance scheme that would provide a guaranteed
basic standard of living for various segments of poor populations (Shin 2001b; Seon
2005). Rho continued this reform effort. He adopted flat-rate tax-financed basic
pension benefits to cover about 60% of retired people. He also introduced an earned
income tax credit scheme for the working poor, along with a long-term care
insurance scheme (the LTCI) for the elderly. Last but not least, he expanded
childcare and daycare services and facilities targeting poor working families (Kim and
Guak 2011). While all these benefits were not generous enough, coverage was clearly
expanding (Kim and Kim 2005; Lee 2011; Song and Hong 2006).
Interestingly enough, the conservative party in opposition did not resist these
reform efforts. Defying its long-maintained pessimism on universal welfare, the party
began taking a more conciliatory approach to the policy initiatives. Its new approach
continued even when it returned to power in 2008. It did not return to its old
particularistic welfare agenda, but rather stayed with the new framework of social
welfare that had been set during the past years of the reformist governments. We
explain this process of reform stabilization by relying on the logic of the ratchet
effect.
Various case studies have already provided good evidence and narratives to support
this claim. Once the Kim government initiated a series of welfare reforms, the
conservative party decided supported the policies (although reluctantly at least in the
beginning, as seen during the health care reform (Lee 2004; Wong 2005)) in order
to restore electoral popularity. The party was particularly interested in improving its
anti-welfarist reputation among many pro-welfare civil organizations who represented
various interests of social risk groups (Ahn 2000; Oh ed. 2000; Yang 2004; Won
76 현대정치연구
2017년 봄호(제10권 제1호)
2003). The party’s commitment to welfare reform became even more prominent
when it lost another presidential election in 2002 and also suffered from another
major defeat in the 2004 election for national congress. Following these defeats, the
party began coordinating its policies even more closely with major pro-reform NGOs.
These organizations were pressing hard for a breakthrough in various reform agendas
that the reformist government was involved in – such as basic pension, earned
income credit, long-term elderly care, and various family policies (Cho, Ku, and Na
2009; Choi and Lee 2010; Lee 2011). The conservative party joined actively in these
efforts, hoping that it would help them win back the upcoming presidential election
scheduled in 2007 (Seoul Daily 20071); The Korea Economic Daily 20072)).
The introduction of basic pension scheme presents one clear case for demonstrating
the conservative activism in reform agendas. Initially, the Rho government was rather
cautious about this fully tax-financed pension scheme because of its implication for
long-term fiscal sustainability. The conservative party however took a more assertive
approach. It demanded a universal basic pension scheme for all retired people. The
benefits should also cover up to 20% of the average monthly income of national
pension contributors (Seoul Daily 20053)). Following intense policy debates, the
conservative party finally earned a compromise from the government. Starting in
2008, the new pension plan would cover 60% of those older than 65 with a monthly
payment equivalent to 5% of the average income of national pension contributors.
The replacement rate would then gradually increase, reaching up to 10% by 2028
(Kyunghyang 20074)). Throughout this policy initiative, the conservative party made
a strategic coalition with social democrats (represented by the Korean Democratic
1) “Hannaradangeun byunsinjoong,” Seoul Daily 2007/04/16 (in Korean).
2) “Hannara ‘Soogoo image butza’ zua click joon,” The Korea Economic Daily 2007/04/16 (in
Korean).
3) “Samnyunzzae Pyorue: Kookmin yeonkumgaejeongan jaengjeom,” Seoul Daily 2005/12/03 (in
Korean).
4) “Kookmin yeonkumbub eottokae baqquina,” Kyunghyang 2007/06/30 (in Korean).
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 77
Labor Party which had small seats in the National Assembly) and other pro-welfare
NGOs such as People’s Solidarity for Participatory Democracy (PSPD), Women’s
Association United (WAU), and Korean Senior Citizens Association (KSCA). These
organizations had been known for their activism in progressive welfare reform, and
also had long maintained a closer relation with reformist politicians. Nonetheless, the
conservative party decided to utilize their voices to draw more concession from the
government (Cho, Ku, and Na 2009; Hyun 2008).
3) Resurgence of the Conservative Party and the Sustainability of New
Welfare Policies
Of particular interest to the present analysis is the fact that this situation did not
change even when the conservative party fully recovered electoral popularity and
returned to power. The conservative governments led by Lee Myung Bak
(2008-2012) and Park Geun Hey (2013-2017) provide prime cases for such political
development. Among these cases, the present study will focus more on policy
examples drawn from Lee government, considering the availability of more
established facts and data. Welfare policies by Park government is still an on-going
process, meaning that it will require more scholarly efforts to reach a broad consensus
as to what happened with the government in most recent years. The author will
therefore lay out only limited information for the policy developments under Park
government, paving a ground for a future analysis.
The conservative party returned to power with Lee’s landslide victory in the 2007
presidential election. Considering the enhanced power position for the conservatives
after the election, one could expect that the new government would return to the
old conservative agenda on social welfare. This scenario, however, was not realized.
Although the government did not introduce further reform agenda, it did stay with
the reform path that had been established during the past ten years of the reformists’
rule. It continued to support all flagship welfare policies introduced by Kim and Rho
78 현대정치연구
2017년 봄호(제10권 제1호)
governments, including social insurance benefits with full coverage, flat-rate
payments for the targeted poor, income tax credits, the LTCI, and leave and
family/child care policies – although the new government sought to finance and
deliver these benefits in a more market-oriented way than the reformists did (Joo
2008; Kim and Kim 2012; Kim and Nam 2011). In the beginning, Lee government
took a rather passive approach whereby it continued the existing welfare measures
but with no further spending. Later, as its popularity declined, Lee government took
a more active approach by increasing public spending on the existing policies (Choi
2010; Kim and Nam 2011). The expansion of family spending such as child
allowances, child care, and day care was among the widely cited examples of such
activism (Kim and Kim 2012).
This overall assessment lends support for the claim that new welfare policies
survived even in the potentially hostile periods of the conservative rule. Nonetheless,
the author notes that in certain areas the conservative government indeed made
considerable efforts to cut back on the benefits for the risk populations. This was
clearly the case in their early days in power following the 2007 presidential election,
the periods in which it enjoyed their highest level of political popularity. Even during
these periods, however, the government soon worried about the electoral
consequences of its policy drive, eventually returning to the reformist path set by
the previous governments. Considering that the feedback hypothesis built on the idea
of policy inertia and could therefore be best tested when the new policies were
explicitly challenged by anti-reform efforts, the analysis in this section focuses on
these early cases of policy reversals as clear evidence that the policy feedback worked
even under the conservatives’ rule.
Soon after the electoral victory in December 2007, the conservative government
made a series of policy announcements laying out its plans to review some of public
pensions and healthcare benefits (Joo 2008; Presidential Transition Committee 2008,
43-4). Regarding public pensions, the government proposed a change in the benefit
formula for low-income populations. The system in place at the time provided small,
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 79
tax-financed flat-rate payments for 60% of the retired people with low incomes. On
top of that, the National Insurance Fund provided contribution-based benefits
depending on the recipients’ qualifications. While this type of multi-tiered pension
formula was not rare in advanced democracies, the government considered it an
unnecessary form of double payment. Therefore, it proposed a policy change by
which the Fund would subtract the amount of basic pension paid to the recipients
when providing them with pension benefits. The conservative government also made
another effort at policy change, focusing on the health insurance system. Up until
that point, it had been mandatory for the public scheme to provide insurance
benefits for all covered medical services: no hospital was allowed to bypass this
scheme when providing covered services to patients. The government promoted a
plan to relax this constraint, allowing certain qualified hospitals to legally refuse
patients covered by the public scheme in an effort to provide more expensive,
higher-quality medical services to those with private insurances.
These proposed changes, if implemented as planned, would have meant
considerable losses in welfare benefits to various segments of populations (The
Dong-A Ilbo 20085) ; Seoul Daily 2008 6)). The president and his political staffs
took the initiative of pushing for those policy drives (Dong-A Ilbo 2008). Following
a short period of tension with pro-welfare oppositions, however, the government soon
withdrew its original plans (Joo 2008). We trace this process of early policy drive
and reversal by focusing on the case of health insurance. In comparison with the
pension debate, the policy shift in this area was more explicit, as the government
officially announced that it would abandon its plans. Meanwhile, the policy reversal
in the pension case was more nuanced, as the government implicitly withdrew the
plan by delaying its final decision, with no specific timetable (Joo 2008).
To trace the trajectory of the healthcare reform more closely, when the
5) “Geonbo whanja anbatneun byungwon sanguinda,” The Dong-AIlbo 2008/02/22 (in Korean).
6) “Geonbo dangyeonjijeongjae hyunhangdaero,” Seoul Daily 2008/04/30 (in Korean).
80 현대정치연구
2017년 봄호(제10권 제1호)
government released its plan in February, 2008 (Presidential Transition Committee
2008, pp.43-4), it therefore fell under heavy criticism from the society. Various civil
organizations and especially major health advocacy groups (such as Health Right
Network) led this criticism. They claimed that the proposed plan would limit the
accessibility of medical services for various risk groups who were relatively poor and
disadvantaged. The overall medical costs would also increase by incentivizing
hospitals to focus more on high-quality, high-cost medical services outside the public
insurance scheme (Kukminilbo 20087)). Opposition parties joined in this criticism
during their campaign for the upcoming congressional election scheduled in April.
Worrying about the electoral implications of these mounting criticisms, the ruling
conservative party also detached itself from the health issue during its congressional
campaign (Kyunghyang 20088)). The government then began to soften its policy
stance to assist the ruling party. For instance, the head of the Department of Health,
Welfare, and Family held a big press conference during the campaign period,
emphasizing that he would not promote any policy change that would jeopardize
the coverage of benefits under the current health insurance system (Hankook Ilbo
20089)). The government finally renounced its plan a few days after the congressional
election (MK Business News 200810)). It instead announced a moderated version
of policy change (although again criticized and blocked by pro-welfare voices),
whereby it would allow high-cost medical services only in few limited areas of the
country, while keeping the basic provisions of public insurance intact (Hankyoreh
200911)).
7) “Youngri bubin minbo whalseongwha: kookmin geongang palameokji mara,” Kukminilbo
2008/03/11 (in Korean).
8) “Geonbo minyeongwha ‘Euiryo yangkeukwha symwha’ yadangseo chongryeok gongsae,”
Kyunghyang 2008/04/04 (in Korean).
9) “Kim seong-i bokji ‘geongang boheom teul heundeulaseaneun andwae’,” HankookIlbo
2008/04/01 (in Korean).
10) “Dangyeon jijeongjae wanwha choojinanhanda,” MK Business News 2008/04/29 (in Korean).
11) “Bokjiboo ‘yeongri byungwon jogeonbu heoyong,’ simindanchae ‘malroman jogeonbu’,”
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 81
Meanwhile, the newly elected conservative government, led by Park Geun Hey,
adopted a similar approach as Lee government did. Like its predecessors, the new
government made substantial efforts to cut social insurance programs that were
inherited from the past particularistic welfare regime (as demonstrated by the
public-sector pension cut in 2015 (Cheon 2015). It also continued to support all new
policy areas that had been introduced by previous reformist governments and
sustained by Lee government. Overall, the public social spending continued to grow
as a percentage of GDP: increasing from 5.59% of the two reformist governments
and 8.25% of Lee government to 9.48%. Spending on health care, family, and senior
policies also continued to keep the pace with the overall spending trend.12)
Note that these numerical figures did not necessarily mean that welfare policies
under Park government became more generous (because the spending could grow
simply as a result of an increasing number of benefit recipients). But it was also
true that there were no public efforts to roll back existing welfare benefits for social
risk groups – although the government sought to make those benefits more
selective ones towards needy citizens (rather than benefiting all citizens) and to
expand the scope of privatization in the delivery of publicly-sponsored services and
assistances (Lee 2015). Benefits from the statutory public assistance scheme were
expanded to cover more low-income citizens with better benefits (Lee and Kim
2016). Family benefits became more generous, providing universal care support or
cash allowances for all families with new born or young children (aged between 0
and 5) (Lee and Park 2015). The government also continued its commitment to
minimum pension benefits. Although it withdrew from its electoral pledge to turn
the existing selective benefit system (covering 70% of low-income elderly citizens)
Hankyoreh 2009/04/08 (in Korean).
12) All the spending figures were drawn from Korean government statistical portal (KOSIS
http://kosis.kr/ (searched on 2017.04.01)). The portal provides the public spending data up
until 2014. Therefore the spending figure for Park government covers only the data from
2013 and 2014.
82 현대정치연구
2017년 봄호(제10권 제1호)
to a universal one, the government continued to provide cash benefits for the target
populations within the status quo (Oh and Lee 2015).
Notice that there was one notable area which diverted from this broad policy
paradigm endorsed by Park government. In the presidential inauguration address,
Park announced that her government would resume the privatization project for
health insurance and medical service systems that had been unsuccessfully attempted
by Lee government. Certain qualified hospitals would be able to bypass the public
insurance scheme by providing selective medical services. They would also be allowed
to enter various medical-related businesses by setting up sister companies. Again,
civil society actors played a leading role in mobilizing social opposition to these
proposed changes. United under an umbrella organization supporting public health
care, they criticized that the government’s plan would make medical services more
diversified, more privatized, and therefore more expensive for ordinary and
economically-disadvantaged citizens. Responding to these widespread social voices,
opposition parties who had initially supported the reform plan decided to oppose it.
Like in the case of Lee government, the privatization plan for public insurance and
medical services marked another failure (PSPD 2014, 2016).
6. CONCLUSION
This article represents an explicit effort to account for the political dynamics of
welfare reform stabilization in Korea. Relying on the notion of the ratchet effect,
it has provided and confirmed a specific partisan/electoral account for reform
stabilization. In doing so, it has found that political parties – even conservatives
– became more steadily committed to new welfare policies once these were
introduced. The electoral concern for new risk groups, as amplified by active
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 83
involvement of pro-reform civil organizations, was the key driving force behind the
convergence of preferences among political parties.
This study brings the following contributions to the existing scholarship of welfare
reform. First, it brings to the literature a relatively new but important topic of
research. As already discussed in the article, existing studies on the political dynamics
of welfare reform in Korea focused primarily on the question of how and why the
reforms occurred. The situation has not been much different for the broader literature
of advanced democracies (which has mostly covered core OECD countries). There,
researchers have been interested in the question of how and under what political
circumstances major reforms occurred, although they have noted that politicians had
to overcome much stronger resistance from welfare insiders than in the cases of East
Asia (Armingeon 2006; Bonoli 2012; Giger and Nelson 2010; Green-Pedersen 2002;
Hauserman 2010). This study builds on these recent studies of welfare reform, and
further advances research agenda by providing a clue as to how and under what
circumstances the reform could be stabilized.
The study also contributes to one of the important theoretical debates in the
welfare reform literature, which has revolved around the question of how political
partisanship matters in welfare reform. As already discussed in the article, most
existing studies on the Korean case have relied on the framework of classic partisan
theory to account for the reform dynamics. The article challenges this tradition by
adopting an alternative framework drawn from rational partisan theory. This
alternative framework is logically compatible with the classic partisan framework in
explaining the occurrence of major reforms; furthermore, it provides a better
explanation for the question of reform stabilization, as demonstrated by the analysis
in support of the ratchet mechanism. Overall, rational partisan theory presents a
more comprehensive perspective on the political dynamics of welfare reform in Korea.
In fact, such controversy between diverse partisan perspectives goes well beyond
the specific context of the Korean case. The partisan variables have indeed appeared
repeatedly in the major studies of welfare reform in advanced democracies. Building
84 현대정치연구
2017년 봄호(제10권 제1호)
on the classic partisan framework, some studies (Allen and Scruggs 2004; Amable,
Gatti, and Schumacher 2006; Korpi and Palme 2003) have argued for the persistent
importance of the traditional left vs. right partisanship in the reform process. Others
challenge these accounts by adopting alternative rational partisan arguments
(Armingeon 2006; Bonoli 2001; Gigger and Nelson 2010; Pierson 1994). While
being diverse in their specific causal accounts, these alternative partisan studies
emphasize that political parties have constantly adjusted their preferences, depending
on diverse electoral circumstances that they have encountered during the course of
welfare reform. Our analysis adds validity to this latter perspective by elaborating
and expanding its logic to a particular context of reform stabilization in Korea.
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 85
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심사일: 2017.02.27.
게재확정일: 2017.04.12.
THE POLITICS OF PUBLIC WELFARE IN SOUTH KOREA, 1990s-2010s 91
한국의 공공복지의 정치: 역진억제 효과와 복지
개혁의 지속성
박성호 | 연세대학교
본 논문에서 저자는 당파적 선거경쟁이론에 입각하여 최근 한국에서 나타난
공공복지의 팽창 현상을 고찰하고자 한다. 기존 연구들은 1990년대 후반 이후
한국에서 공공복지의 팽창이 본격화된 이유를 보수정당과 개혁주의정당 간 권력
관계의 변화를 통해 설명한다. 하지만 이 연구들은 새로이 도입된 복지정책들이
이후 지속적으로 안정화된 이유에 대해서는 체계적인 설명을 제공하지 못하고
있다. 본 논문에서 저자는 한국에서 복지개혁의 안정화 현상을 ‘역진억제효과
(ratchet effect)’의 가설을 통해 설명하고자 한다. 이 가설은 서구 민주주의 국가들
의 복지개혁 연구에서 광범위하게 수용되는 정책 피드백 (policy feedback) 이론에
기반한 것으로, 새로운 복지정책이 도입되면 새로운 수혜자 집단이 형성되고
주요 정당들은 해당정책 철회 시 예상되는 선거 역풍을 고려하여 그 정책을
계속 지지하게 된다는 인과논리에 바탕하고 있다. 특히 역진억제의 이면에는
최근 복지개혁의 주요 수혜자로 등장한 신위험계층 (new social risk groups)을
대변하는 시민사회세력의 저항과 반발이 자리잡고 있다. 이러한 피드백 과정을
통해 친복지 개혁정당뿐 아니라 애초에 개혁을 지지하지 않았던 보수주의 정당
조차도 새로운 복지정책의 지지자가 되었음을 발견할 수 있다.