KIHASA Update

Beyond the Pandemic: Vision for a Stronger Welfare State

  • Date 2023-04-04
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KIHASA has released a policy video with English subtitles that provides insights into the impact of the pandemic on Korea's welfare system. In this video, Lee Tae-soo, President of KIHASA, discusses the impact of multiple global crises on Korea and explores the major transformation of existing social orders due to the pandemic. He examines the social risks that have emerged in the aftermath of the pandemic and presents his vision for strengthening Korea's welfare state in the post-pandemic era. Join us we delve into this timely and important topic of shaping a better future for Korea's welfare system. Click here to watch the video.

Script

We are now living in a world that has been drastically changed by COVID-19.


During the height of the pandemic, nearly 600 million children were unable to attend school, and 55 percent of the global businesses were said to have adopted remote working. Video conferencing quickly became commonplace, and hospital emergency rooms were forced to close. Some countries had closed their borders and placed some areas on full lockdown.


Of course, even before the pandemic, the world was undergoing rapid changes known as "multiple gobal crises."


Now, I would like to talk about some of these "multiple global crises" that have made our future uncertain.


First, there is the crisis of the Fourth Industrial Revolution.


Advanced digital technologies such as artificial intelligence, the Internet of Things, and big data are causing tectonic shifts in our lives. This hyper-connected, hyper-intelligent, and hyper-industrial society will change the fate of nations, companies, and individuals. Countries that relied on traditional manufacturing industries will decline, low-value-added industries will wither away, and half of the existing jobs will disappear.


While the beneifts and drawbacks of technological development have been present throughout human history, the challenges posed by the Fouth Industrial Revolution are particularly significant. The rise of robots replacing jobs, the security risks of the Internet of Things, and the AI ethics are just a few of the complex issues we are currently grappling with. These challenges are becoming increasingly difficult for humanity to handle.


Second, there is the crisis of political and economic hegemony.


The rivalry between the United States and China is having a major impact on international affairs. The struggle between the two powers is intensifying as the U.S. views China's rising power as a threat and seeks to contain it, and China pushes back against the U.S. This escalating rivalry poses numerous economic and security risks for many countries, including our own.


Third, we have the climate crisis.


The global average surface temperature has already risen by 1.09 degrees Celsius above pre-industrial levels. If temperature rises by another 2 degrees, we will see irreparable damage to coral reefs and tropical rainforests, as well as the extinction of calcareous marine species. A 3-degree rise would trigger severe famines and desertification in savannah regions. If temperatures rise by 6 degrees, 95 percent of land and marine species are predicted to become extinct, and human survival cannot be guaranteed. The climate crisis demands prompt and committed action from our generation.


With the world facing such rapid changes and the ensuing crises, how is Korea faring?


The first set of major changes facing Korea that comes to mind is the low birth rate and an aging population.


Korea is already known as an "ultra-low fertility society," with its total fertility rate having fallen to 0.81 in 2021. In addition, the country is aging rapidly. In 2000, the percentage of Koreans aged 65 and over reached 7.2 percent of the total population, leading Korea to be classified as an "aged society." By 2026, the aging rate is projected to increase to 20.8 percent, making Korea a "super-aged society."

The continuing trend of population decline due to low birth rates and accelerating aging will have a significant impact on Korean society in the future.


The widening gap between income levels, industries, enterprises, social classes, regions and genders is exacerbating the crisis in Korean society.


The digital revolution will widen the gap in corporate profits and between workers who have embraced technological change and those who have not. The gap between urban and rural areas and between metropolitan and non-metropolitan areas will also widen as our society faces a "demographic cliff." If these disparities persist, Korea will become a "hyper-gap" society where multiple structural inequalities take hold, gradually becoming a disconnected society.


In South Korea, the relationship with North Korea is an issue that cannot be overemphasized.


If North and South Korea were to reunify peacefully, the combined population of the two Koreas would reach 80 million. With a stronger economy and lower military spending, a unified Korea would rank fifth on the Global Peace Index, up from 49th today. In addition, the economic benefits of peace between the two Koreas are estimated to raise per capita national income to $75,000 by 2047. However, there are many challenges to overcome, including the complex international order surrounding the Korean Peninsula and 70 years of accumulated hostility between the two Koreas.


Alongside ongoing domestic and international crises, the COVID-19 pandemic has added another shock to the world, upsetting the established order.


On the economic front, COVID-19 has slowed logistics movements around the world, reducing supply and demand at the same time. There are concerns that so-called "slobalization" - "slow globalization" or the "slowdown of globalization" - could cause globalization to regress and destabilize Korea's export-driven economy.


On the technology front, COVID-19 has accelerated the digital economy. However, it has also brought to light the increasing inequqality that arises from varying levels of response capability among countries and industries.


In terms of industry structure, service industries such as tourism, culture and personal services have shrunk, while non-face-to-face services have emerged as new indsutries, resulting in changes in the labor market and work patterns.


In terms of lifestyles, the contactless and virtual world has become a way of life. At the same time, new forms of family and community have emerged, as well as new insecurities, including feelings of alienation and isolation. 


On the climate-ecology front, a global response to the climate crisis has begun: capital can no longer pursue unlimited profits without social responsibility for the costs of ecological destruction.


The great transformation of the existing order has also created new social risks that need to be addressed collectively by states and societies through institutions.


First, there is the risk of relationships.


The risk of infectious disease has caused a shift from in-person gatherings to digital ones, but this change only applies to those who are accustomed to digital communication. Those who are unfamiliar with it may experience communication limitations that could jeopardize their daily relationships and their interactions within their community and other social relationships.


Next, there is the risk of transformation.


At this point I'd like to talk about digital transformation and ecological transformation.


Digital transformation means that as the contactless world expands, the digital industry grows. However, industries that depend on physical movement, such as tourism and the performing arts, will experience a significant decline, leading to a reduction in related jobs. On the other hand, there will be shifts in the labor market, such as an increase in platform workers, and workers who cannot adapt to the changes may lose their jobs.


Ecological transformation refers to the comprehensive process of transforming economic, industrial, and energy structures to achieve carbon neutrality and reduce greenhouse gas emissions, with the ultimate goal of slowing down the pace of the climate crisis. However, during the transition to a decarbonized economy, there will be industries, regions, and groups of people who will be adversely affected by the artificial restructuring. Protecting the jobs, livelihoods, and homes of those affected is what is known as a just transition. Ecological transformation, while vital itself for the environment, must be accompanied by a just transition that involves proecting industries and workers and helping them learn new skills.


Finally, there is the risk of a shutdown.


COVID-19 is just the beginning: more natural and social disparities are inevitable. As we have already experienced, pandemics can trigger lockdowns that bring economic and social activities to a halt. This can result in not only a loss of income, but also disruptions to relationships, leisure activities, travel, and other routines.


As a result of these disruptions, many people will face reduced income and additional care responsibilities. This will require a large-scale emergency infrastructure, such as emergency income support.

In the post-COVID-19 era, there is a risk that class, regional and industrial inequalities, as well as social divisions, will worsen. That's why it's crucial that we build a welfare state that addresses these risks and protects people.


Although there is till much to be studied and debated, I would like to propose the following three suggestions for the direction of the Korean welfare state in the post-pandemic era.

First, the income security system must be restructured.


The typical income security system in a welfare state consists of social allowance, public assistance, and social insurance. However, in the post-pandemic era, I believe that social insurance should be transformed from an employment-based system to a "national social insurance" system. Under this new system, premiums would be collected, and benefits would be provided based on income. Social allowances should also be designed so as to enable people to pull through the various challenges they face throughout their life cycle.


With a greater emphasis on social insurance and benefits, public assistance would play a smaller role and would only be used in cases where catastrophic events cause a significant reduction in income. In addition, public assistance would be provided on an individual rather than a household basis.


Second, there must be a publicly-guaranteed, comprehensive care system in place.


After the pandemic, relationships between people will be disrupted and individuals may experience increased isolation. As a result, the care functions for which individuals and families have been responsible will be severely weakened. To address this issue, there is a need for fundamental reform of the scope, delivery system, and financing of care-related services. It is important that social care, health care, and social and housing services be provided to those who need them in the community through a one-stop approach. This will increase the responsibility of local authorities. Only by implmenting such a system will it be possible to support families and individuals in maintaining independent living in the post-COVID-19 era, helping them withstand the risks of relationships and disasters that they may not be able to manage on their own.


Third, new benefits will need to be created to cover risks that individuals cannot tackle on their own in the post-pandemic era.


As we move into a post-COVID-19 era, the essentials of what constitutes a decent life may also change as we transition to a new society. It will be therefore necessary to provide publicly guaranteed benefits that take account of these changes. New services of great interest may include those that promote environmental sustainability, such as clean energy, safe drinking water, clean air, and amenities. This approach can be called as a "green benefit," which combines the existing Korean welfare state concept with a green welfare state. In this way, we can create a more forward-looking vision and pave a new path.


It is evident that with the COVID-19 pandemic, we have suffered a devastating crisis and will have to face yet more challenges in the future. However, it is important to note that such a crisis can also serve as a catalyst for new opportunities and progress. We can and should lead happier lives in a better society.


In the post-Corona era, the Korea Institute for Health and Social Affairs will play a crucial role in leading health and welfare policies with greater responsibility, ushering in the era of Korea's welfare powerhouse.

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