1. How was social policy integrated in development
strategy in South Korea
Seoul Policy Dialogue
1 - 2 November 2012
UNDP Seoul Policy Centre and KDI
ILCHEONG YI
Research Coordinator
Social Policy and Development Programme
UNRISD
Geneva, Switzerland
www.unrisd.org

2. Definition of Social Policy
“Social policy is the collective interventions to directly
affect social welfare, social institutions and social
relations. It is concerned with the redistributive
effects of economic policy, protection of people
from the vagaries of the market and the changing
circumstances of age, the enhancement of the
productive potential of members of society, and the
reconciliation of the burden of reproduction with
that of other social tasks.” (Mkandawire, 2004)

3. Multiplicity of Objectives
• Social policy in developing countries is not only
about poverty eradication.
• Historically, social policy has had other objectives
such as national or social cohesion and equity
• Indeed, in a number of countries that have
successfully dealt with poverty within a relatively
short period of time, the relief of poverty was not
even the most explicit motive for the introduction of
social policies. In the Nordic or East Asian
countries, for example, “poverty reduction” per se
was not one of the main pillars of their social
policies.

4. • Social policy must deal with distribution, protection,
production and reproduction
• Different welfare regimes have placed different
weights on each of these. Thus, while one may
speak of “distributionist” or “productivist” welfare
states, one has to recognize that such descriptions
are merely positions on a continuum.

5. • False dichotomy : laissez-faire vs. planning.
In fact, “Planned Economy” or “Economic Planning” is a
tautology since “economy” itself by definition implies the
purposive activities which dispose available resources
for a specific goal or end. A key issue in the policy
towards economy is, therefore, that to what extent we do
or should control economic activities rather than whether
we should or should not control economic activities
(Myrdal, 1960; Lewis, 1966).

6. • How was social policy incorporated in development
strategy in South Korea?
• Planning understood in a broad term such as “conscious
attempts by the government of a country to coordinate
public policies more rationally in order to reach more fully
and rapidly the desired ends for future development
which are determined by the political process as it
evolves” (Myrdal, 1960). It refers to a variety

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12. • Misperceptions about South Korean Development
– Social policy free zone
– Marginal role of social protection

13. • Land Reform in the 1940s and 1950s
– Severe inequality in landholdings, with more than 80
per cent of farmer as tenants paying usurious rent in
1945
– Two land reforms, entailing redistribution of previously
Japanese-owned lands and the lands of large Korean
landowners, were implemented by the US Military
Government in Korea (USAMGIK, 1945-1948) and
the Rhee government (1948-1960).

14. • Land Reform in the 1940s and 1950s
– Under the Rhee government, 74 per cent of land
subjected to reform was redistributed. The
government acquired the land, compensating
landowners with government bonds whose value was
below the market value of the land. The reform thus
had a strong wealth redistribution effect. This was
compounded by increasing fiscal instability and rising
inflation, which further reduced the value of the
bonds.
– The proportion of families owning all or part of the
land they farmed rose dramatically, from 48.4 per
cent in 1945 to above 90 per cent after land reform in
the 1950s.

15. • Land Reform in the 1940s and 1950s
– Under the Rhee government, 74 per cent of land
subjected to reform was redistributed. The
government acquired the land, compensating
landowners with government bonds whose value was
below the market value of the land. The reform thus
had a strong wealth redistribution effect. This was
compounded by increasing fiscal instability and rising
inflation, which further reduced the value of the
bonds.
– The proportion of families owning all or part of the
land they farmed rose dramatically, from 48.4 per
cent in 1945 to above 90 per cent after land reform in
the 1950s.

17. • Economic Development Plans :
1. Inter-ministerial dialogue (pooled resources): The
Economic Planning Board asked all the ministries to
submit the proposals in line with the economic
development plan for economic growth. All the ministries
participated extensively in the plan deliberation, and they
at least could be well aware of the overall resource
constraints. Therefore economic development plans
became a meaningful guide for the government’s capital
budget and decisions on approval of foreign investment
within South Korea (Cole and Nam, 1969).

18. • Economic Development Plans :
2. Think tanks : ex. the Korea Research Institute for
Health and Development (established in 1975), the
Korea Education Development Institute (established in
1972), the Korea Development Institute (established in
1971)
3. The social policy, in particular the investment in social
overheads such as schools and hospitals was planned
based on the projection of industrial demands which
were in most cases unrealistically ambitious but
consequently surpassed by the reality. The ministries
related to the human resource and infrastructure such as
the Ministry of Educaiton and the Ministry of Labour had
to make its solid plans to secure the budget to meet the
demands for education and training, and facilities during
the period of the Economic Planning.

19. • Education and Health
Apart from fees for university education, there is no
significant difference in terms of service quality and costs
borne by users between public and private provision of
education and health services.
Primary and lower secondary education are
predominantly public, and upper secondary and higher
education are predominantly private. Since 1945, public
schools have provided education to more than 98 per
cent of primary school students. The proportion of
students in public lower secondary schools increased
from 55 per cent in 1965 to 81 per cent in 2005. In
contrast, about a half of students in upper secondary
education and more than 80 per cent of students in
higher education are in private institutions.

20. • Education and Health
With regard to the provision of curative health services,
the expansion of for-profit sector, however, is one of the
key features of the Korean health service system. In
2010, 88.2 per cent of the total beds were in for-profit
establishments, compared with 41.8 per cent in 1962.

21. • Urban and Rural Development
Contrary to the conventional view that agricultural
development is a precondition or precursor to industrial
development, rural development in the Republic of Korea
followed the take-off of labour-intensive export-oriented
manufacturing industries. Rural development in terms of
income per household and improvement of basic
infrastructure were mainly due to the resource transfer
from urban to rural areas through various policy
mechanisms.

22. • Informal and Formal Social Protection
Two factors were argued to contribute to reducing
absolute poverty and inequality between households in
terms of income distribution at least until the Asian
financial crisis. Firstly, increased labour market
participation and low unemployment rate were the
key factors behind the reduction of poverty and
inequality at least until the 1980s. The increasing wage
share against the total national income could contribute
to reducing poverty and income inequality since there
was a relatively less inequality in terms of wealth, in
particular the land.

23. • Informal and Formal Social Protection
Secondly, the customs of elderly people living with
their children, young people living with their parents
until marriage and the relatively low rates of divorce
were pointed out as the main factors fostering the
potential for income redistribution with thin family
cell. Under the circumstance where the distribution of
work between households is equal, i.e. there are fewer
households without any working members, and also
relatively few households with two “core workers”, these
factors certainly contributed to reducing poverty and
inequality.

24. • Social insurance schemes have developed in the
way to maximize the benefits of these two factors.
• These two factors and social insurance schemes
reinforced each other until the introduction of
flexible labour market.
• Since the Asian Financial Crisis and the introduction
of flexible labour market, the synergistic linkages
between these broke down, or became weakened.

26. Concluding Remarks
• Social policy have not tackled “poverty” per se, but
the consequence of the synergies of all the policies
was the reduction of poverty and inequality.
Development in All Policies were pro-poor.
• Policy sequence: Different sequences in different
policy areas. Lessons should be about how policies
are interrelated (synergies of policies) rather than
which one comes first (a sequence of policies).
• Financial sustainability of social protection : Jobs, in
particular decent formal jobs are the basis of the
financially sustainable social protection schemes
(tax and contributions, etc).

27. Questioning Conventional Wisdoms
Suggesting Alternatives
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