This report aims to define the relationship between social integration and income increase of the low-income group, hence discussing how the direction of income increase of the low-income group should be set by examining general sets of policies instead of specific ones.
Social integration is considered as an essential policy task as it is deemed as an indispensable that can foster a political economy of sustainable growth. As the 1980s was a period of structural adjustment for advanced countries, the 1990s turned as a period of social integration as the economy grew back and society sought to correct the side-effects of structural readjustments. In the past, the level of growth and distribution were improved simultaneously in the case of Korea, leaving no room for social integration to rise as a problem. The Issue however rose as the gap between growth and distribution widened after the financial crisis of the late 1990s.
Sprung as a social or political concept rather than economic, social integration is defined as the “improvement of the sense of attachment to a community, thus sharing values and perceptions in order to be able to deal with challenges collectively,” as well as “a process of minimizing the gap between wealth and income.” Specific tasks targeted at achieving social integration are set differently among countries as they are intricately related to the distinct circumstances of the countries.
On a general scale, the middle-class consensus turns growth-oriented if the middle class or the middle 60 percent of society hold high income shares. In Korea’s case, the income share of the middle class after the financial crisis fell down as low as that of the 80s, but was able to recover back in mid-2000 as high as that of the 90s. Thus, it can be assumed that Korea’s middle-class consensus has most probably changed to become growth-oriented.
Meanwhile, developed countries share a tendency to attach high importance to social integration in order to achieve sustainable growth, regarding social integration to be linked with poverty reduction. They consider sustainable growth as the main task of development policies, putting emphasis on building a political economy that can embrace an environment maintaining growth according to changes in the environment. Hence, it can be assumed that developed countries seek to achieve and maintain social integration by preventing relative poverty from expanding, which could trigger resistance to change.
While a growth-oriented middle-class consensus is gaining momentum in Korea, the expansion of poverty yet remains as a big problem. As the real income of the middle class between 1995 and 2005 recorded an annual average growth of 1.6% while the income of the bottom 20% was stagnated, the consequences of change after the financial crisis turned out to be focused on the low-income group. Thus, an income increase of the low-income group is becoming a priority to achieving social integration. This is ultimately relevant to achieving a political economy of sustainable growth.
A stagnated income among the low-income group is a result from changes in the demand of labor rather than the supply. Taking this into consideration, a set of multifaceted policies meeting the following conditions must be implemented in order to increase the demand for low-skilled workers and increase their income –macroeconomic stability; increased domestic consumption; long-term financial stability; expanded social insurance; reorganized social welfare policies; direct and efficient management of job-creating programs by the government; training of workers; improved working conditions and increased birthrates of women; and improve med protection policies for non-regular workers.
사회통합의 과제와 저소득층 소득향상(Tasks for the achievement of social integration and income increase of the low-income group)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < General|
|Holding||KDI; KDI School|