[Exclusive] Democratic Party New Welfare Report "1 Million Won Monthly for One Year to Middle-Aged with No Income"

'Independent Capital' for 19-Year-Old Youths
Nationwide Social Insurance Institutionalized Over 10 Years
"The End of Park Chung-hee's Growth-First Doctrine"

Source: Minjoo Research Institute

[Asia Economy Reporter Park Cheol-eung] The blueprint for the 'New Welfare' initiative promoted by the Democratic Party has been revealed. It includes provisions such as providing a monthly allowance of 1 million KRW for one year to middle-aged individuals (aged 55-64) without income, and granting 'self-reliance capital' to 19-year-old youth. Additionally, starting next year, all citizens will be covered by social insurance over a period of 10 years, and a 'National Responsibility System for Care' targeting infants, elementary school students, people with disabilities, and the elderly will be implemented. The philosophy breaks away from the 'Park Chung-hee style growth-first principle' and adopts 'universal protection for all citizens' as its fundamental principle.

The Democratic Research Institute, the think tank of the Democratic Party, recently published a report titled ‘Post-COVID New Welfare System ? Vision and Policies for Recovery and Leap Forward,’ authored by eight internal researchers and external academics and experts. Although it is stated that this does not represent the official stance of the institute, Democratic Party leader Lee Nak-yeon mentioned in the foreword that "it will serve as a meaningful textbook for concretizing the new welfare system."

Professor Yoon Hong-sik of Inha University’s Department of Social Welfare stated in the introductory chapter that "the new welfare system is not simply about increasing welfare expenditure, but a result of considering what the state can do for its citizens across all areas of life including care, disaster, unemployment, housing, education, and employment," and declared that "the growth-first principle established during the Park Chung-hee era cannot effectively address the diverse life challenges faced by citizens in the 21st century."

He added, "The basic philosophy of the new welfare system is that the state must safely protect the lives of all citizens, and it will realize welfare policies where both companies and workers can achieve a win-win outcome."

One of the main measures is social allowances and asset formation according to life stages. It is seen as a practical alternative to alleviate disparities and the inheritance of inequality between classes. The plan is to provide a 'Middle-aged Restart Allowance' of 1 million KRW per month for one year to middle-aged individuals (aged 55-64) who have retired before pension eligibility age and have no income activity, with a median income of 150% or less (applying asset criteria).

The payment condition requires applicants to participate in activities, education, or training for job seeking or entrepreneurship. Among middle-aged individuals who are employed or running a business, those earning less than 1 million KRW per month will receive a partial allowance.

A youth self-reliance capital system is proposed for 19-year-old youth. It is a one-time payment throughout the life course, limited to uses such as tuition fees, housing costs, startup, and job-seeking expenses. The priority is set on increasing and universally implementing the basic pension, followed sequentially by expanding allowances for middle-aged, youth, and children.

A plan to extend social insurance benefits, currently for regular wage workers, to all citizens is also proposed. The goal is to institutionalize a nationwide social insurance system starting with employment insurance by 2031. First, the nationwide employment insurance system will be advanced ahead of the current government schedule to include self-employed and platform workers, and the actual income replacement rate of unemployment benefits will be raised to around 60-70%.

The basic livelihood security system will be reorganized into a 'National Basic Livelihood Security.' It will provide livelihood benefits up to 50% for all households with income below 50% of the median income. Regarding eligibility, the criteria for support obligors and conditional eligibility based on work ability will be completely abolished, and medical benefits will be integrated into health insurance.

Regarding care, the system will shift from provider-, facility-, and private-centered social services to user-, community-, and public-centered services. Local governments will be institutionalized to provide high-quality public services based on the community.

There is a negative stance on unconditional universal cash payments. Professor Yoon said, "A good welfare system is known to balance cash (income security) and in-kind benefits," adding, "Cash support is only one policy response to income loss among the various risks citizens face."

He continued, "The new welfare system aims for a welfare system balancing cash and in-kind benefits. While it institutionalizes universal allowances according to life cycle characteristics, it does not institutionalize unconditional universal cash benefits."

This content was produced with the assistance of AI translation services.