National Association of Mayors, County Chiefs, and District Heads Issues Welfare Grand Compromise Statement for Building a Sustainable Welfare System

National Association of Mayors, County Chiefs, and District Heads to Announce Welfare Grand Compromise Statement at the National Assembly on the 28th... Proposing 9 Tasks Across 3 Areas for Rational Role Sharing Among Central, Metropolitan, and Local Governments

[Asia Economy Reporter Jong-il Park] The “National Association of Mayors, County Governors, and District Heads” (Representative Chairman Yeom Tae-young, Mayor of Suwon) (hereinafter referred to as the National Association) announced a Welfare Grand Compromise Statement for the establishment of a sustainable welfare system at a press conference held at the National Assembly at 2 p.m. on the 28th.

The Association proposed a total of 9 tasks across 3 areas for a rational division of roles in the welfare sector among the central, metropolitan, and local governments to advance toward a sustainable welfare state.

This proposal reflects the opinions of 202 local governments nationwide and various experts who participated in the Welfare Grand Compromise Special Committee (hereinafter referred to as the Special Committee), launched last July as an affiliate of the National Association, suggesting fundamental measures for establishing an orderly welfare system.

The National Association diagnosed that despite the expansion of various welfare policies to solve increasingly complex social problems, effective and sustainable responses to welfare demands are impossible due to unreasonable relationships among the central, metropolitan, and local governments. They argued that the current irrational welfare system must be changed and that the welfare finances and affairs among the central, metropolitan, and local governments need to be reestablished.

Accordingly, the central government should take full responsibility for nationwide and universal income-guaranteed welfare benefits such as basic pensions and child allowances, while welfare projects established by metropolitan governments should be fully funded by city/provincial budgets. They emphasized the mandatory establishment of a “Financial Burden Deliberation Committee” involving metropolitan and local governments to build a financial policy partnership through consultation.

Additionally, local governments will form welfare project coordination committees at the city/provincial level to autonomously prepare compliance measures when establishing and operating welfare systems and strive to eliminate regional disparities.

Representative Chairman Yeom Tae-young stated, “While preparing this proposal, we reconsidered the roles and functions of local governments in the welfare sector,” adding, “The current inefficient welfare policy operation and the ongoing deterioration of local governments’ welfare finances could threaten the quality of life of local residents. We hope that a partnership based on consultation among government entities will be realized based on this Welfare Grand Compromise proposal.”

Special Committee Secretary General Jung Won-oh said, “Starting from this announcement, we will carry out continuous activities to implement the Welfare Grand Compromise,” and added, “In May, we plan to propose a sharing plan for local governments in the social service sector, and in June, we will hold a National Assembly forum coinciding with the opening of the 21st National Assembly, focusing on the Welfare Grand Compromise proposal.”

※ Reference: Major Proposed Tasks of the Welfare Grand Compromise

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Welfare Grand Compromise Statement by the National Association of Mayors, County Governors, and District Heads

The Welfare Grand Compromise Special Committee under the National Association of Mayors, County Governors, and District Heads, since its launch last July, has prepared the “Welfare Grand Compromise” plan for building a sustainable welfare state and establishing an orderly welfare system through the participation of 202 local governments nationwide and the collection of opinions from various sectors.

So far, the government has continuously expanded welfare policies to address social issues such as ultra-low birth rates, aging population, and deepening polarization.

However, the top-down policy decisions and unilateral financial allocations by the central government have not only failed to effectively respond to increasingly diverse welfare demands but also made it difficult to assess sustainability.

Accordingly, based on the “principle of subsidiarity,” the Welfare Grand Compromise Special Committee proposes the following urgent reestablishment of welfare finances and affairs among the central, metropolitan, and local governments.

First, local governments must be guaranteed administrative and financial welfare autonomy to perform their roles as providers of social services tailored to regional characteristics.

With authority comes responsibility. Welfare autonomy will be the strongest incentive for local governments to expand the public nature of social services, which fall under autonomous affairs.

Second, nationwide and universal income-guaranteed welfare benefits such as basic pensions, child allowances, and disability pensions should be fully funded by the national government.

The biggest reason local governments struggle to meet regional welfare demands is the excessive local financial burden for national welfare affairs. The current national subsidy system, which imposes national project budgets on local governments, distorts local finances and reduces local governments to mere transmitters of welfare affairs. The national subsidy system must be thoroughly reviewed to establish clear standards and principles for welfare affairs and financial burdens between the central and local governments.

Third, welfare projects established by metropolitan governments should be funded entirely by city/provincial budgets as a principle, and reasonable standards for the allocation of local government funds for national subsidy projects must be established.

The unprincipled financial sharing between national subsidy projects and metropolitan autonomous projects seriously infringes on the autonomy of local governments. This leads to administrative inefficiency, lack of accountability, and deterioration of local government finances. Therefore, the establishment of a “Financial Burden Deliberation Committee” involving metropolitan and local governments should be mandated to build a consultation-based financial and policy partnership.

Fourth, local governments should form welfare project coordination committees at the city/provincial level to autonomously prepare compliance measures when establishing and operating welfare systems, including cash welfare, and further strive to eliminate regional disparities.

For South Korea to advance as a sustainable welfare state, close consultation and organic cooperation among the central, metropolitan, and local governments are essential. We urge government entities to participate in the grand compromise forum for rational role reestablishment.

April 28, 2020

National Association of Mayors, County Governors, and District Heads

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