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Development Overview

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Overview of Korea’s development experience

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Development Overview
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Social Welfare

Low priority on welfare programs

Korea’s top priority during this period was economic growth as reflected in the Five-Year Economic Development Plans that dominated the government policy. Despite the low priority on welfare programs, however, several steps were taken in this period toward building a proper social security system in Korea.

The Livelihood Protection Act was introduced in 1962 to provide public assistance to the poor. It was criticized for stigmatizing its recipients because of its implicit suggestion that they were to be blamed for their poverty, but it was still an important step. In addition, the Social Security Act was enacted in 1963 to serve as a framework for welfare programs. In the same year, the Military Personnel Pension was introduced in addition to the Government Employees Pension that had been introduced in 1960. The Health Insurance Act was established but it did not stipulate compulsory participation for any group in Korean society.

In 1964, the Industrial Accident Compensation Insurance Act was introduced in line with the Economic Development Plans to provide support for workers suffering disabilities as a result of industrial accidents. It was the first social insurance program implemented in Korea. In addition, an industrial rehabilitation center was established under the auspices of the National Labor Office in 1971 to provide occupational training.

There was also a growing recognition of the need for welfare programs to take care of the elderly. The submission of the Basic Plan for Social Development in 1968 by the Social Security Review Committee led to several follow-up proposals, including the establishment of the Act on the Welfare of the Elderly, the development of pension programs, the expansion of medical facilities, the provision of employment opportunities for the elderly, an increase in the legal retirement age and the designation of the Day for the Elderly. The suggestions, however, failed to draw much attention from the government, which was preoccupied with economic growth.

In 1973, the National Assembly passed the National Welfare and Pension Act, but it was not implemented due to adverse social and economic conditions, including the two global oil shocks of the 1970s. Only the Teachers Pension was added to the public pension system in 1975.

In 1976, the Health Insurance Act was revised to stipulate compulsory participation of workers at firms with 500 or more employees beginning in 1977. The coverage was extended in 1979 to include those at firms with 300 or more employees. The year 1979 also witnessed the establishment of a compulsory health insurance program for government employees and teachers. It is significant since the introduction of compulsory health insurance was done at the behest of government rather than in response to public demands. As for low-income households, the Health Care Protection Act was introduced in 1977 to provide them with medical services.

A welfare program for the disabled was also introduced in the 1970s. The Ministry of Health and Social Affairs announced in 1978 the Comprehensive Welfare Program for Mentally and Physically Disabled Persons. Although the program was largely limited to public assistance measures, it did introduce rehabilitation treatment policies as well.

To summarize, basic social insurance programs were introduced in the 1960s and 1970s, including the Industrial Accident Compensation Insurance (1964); pensions for government employees (1960), military personnel (1963) and teachers (1975); and health insurances for private sector workers in large firms (1977) and government employees and teachers (1979). In addition, basic programs of public assistance and social services were introduced for the poor and the disabled. These programs were quite limited in their scope but Korea could improve income distribution due to the rapid growth of labor-intensive industries and the rapid increase of job opportunities.

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.

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