[The Christian Science Monitor] Having built nation from scratch, elderly S. Koreans feel abandoned

Jeong Soon-ja spent a lifetime working and raising children as part of a generation that lifted South Korea from rural squalor and postwar ruin to become the world’s 15th  largest economy.

Yet like many of her peers, Ms. Jeong lives in poverty and isolation. Too frail to work, her husband gone, her children seemingly disinterested, she survives on a government pension of about $200 a month, plus a monthly allotment of kimchi and rice from a district office in the gritty Seoul neighborhood of Gaebong-dong, which lacks the glitz of districts like Gangnam.

“When I was young, I should have saved money, but I had to feed, clothe and teach my children,” says the octogenarian, who sits on her haunches, a stance ingrained among older Koreans. She did laundry and maintenance work all her life and now has no pension, and says, “my money is all gone.”

Family ties weakening?

Jeong’s situation is becoming more common among a generation given credit for aiding South Korea’s lightning rise to manufacturing and high tech prowess. A new government-funded study shows nearly half of South Koreans over 65 living in relative poverty as recently as 2011, in a society whose traditionally strong family bonds are weakening.

One of Jeong’s six children pays her rent and utilities. But in a culture that honors the elderly, she hasn’t seen her eldest or youngest daughter in five years, and rarely hears from the others.

Almost half of elderly South Koreans earn less than 50 percent of the median wage, according to a March study from the Korea Labor Institute. That abysmal rate is the lowest of all countries in the Organization of Economic Cooperation and Development, and is twice the figure of second-ranked Switzerland. (In Japan, a recent study found nearly half of the 1.6 million Japanese living below the poverty line were elderly.)

In South Korea, most seniors in financial straits live alone. Whereas it was once common for three generations to live under one roof, about one in five elderly citizen now resides in a single-occupant household.

Low birth rate

“In the past, when a grandfather and grandmother, or a mother and father, taught their children, those children had a responsibility to support them because living all together like this was a help to everyone,” says Kim Hyun-mi, general manager of the government-affiliated Comprehensive Support Center for the Elderly Living Alone. “But now, you can see that support has weakened because they live separately.”

The challenge of providing for the old is particularly acute in South Korea, which has one of the most rapidly graying populations in the world, a consequence of a chronically low birthrate.

Jo Joon-yong, a professor of social welfare studies at the regional Hallym University, says that the elderly are projected to account for a quarter of the population by 2030, creating a potential future crisis for the welfare system.

“To maintain a social security system, you need a young generation to pay taxes and premiums for the social insurance system,” he says.

Amid the decline in filial piety in Korean families, the government has only marginally plugged the gap in support. Last year, South Korea had the lowest social spending of any OECD country.

President Park Geun-hye campaigned in 2012 on a pledge of introducing a universal state pension of about $200 a month. But that figure got scaled back to about $100-200 for the poorest 70 percent of seniors. Seniors who receive such benefits potentially lose out on separate, means-tested assistance for the poor.

Problems of living alone

The feasibility of more generous welfare schemes has been a political flash point between liberal and conservative politicians in a nation that is roughly divided along these general lines. Political gridlock may be slowing welfare reform, but more social spending in future appears inevitable, given the aging population.

“I think that because it is now in the beginning phase, welfare benefits for the old are insufficient compared to other countries, but in the future welfare benefits will be provided stably just like in advanced countries,” says Ms. Kim, the support center official.

Mental health, loneliness, and what Kim calls “emotional problems” are becoming more pressing concerns among elderly living alone, she says.

South Korea has the highest overall suicide rate in the OCED, and men aged 80 and above die by their own hand at almost five times the rate of those aged 30-39, according to government statistics.

Jeong, who speaks in loud, defiant bursts, insists she is satisfied with life. She regularly meets friends. But she also admits to being lonely.

Above all, she misses her daughters, who she has become convinced no longer love her. Even when she recently was hospitalized for an emergency, they did not visit.

“I really miss my daughters but they never contact me,” she says. “I miss my daughters the most. That’s the saddest thing.”

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[The Korea Herald] Should Korea adopt a welfare state?

By John Power

Social welfare was a defining issue in Korean politics last year. President Lee Myung-bak, having come to power in 2008 with a message of small government, less regulation and lower taxes, was confronted with a slew of opposition proposals for expanding welfare. Then came calls for increased welfare from the unlikely source: Grand National Party, driven by the loss of a Seoul referendum against free school lunches in August and the conservative party’s persistently low approval ratings. At the beginning of a year of major elections, the political momentum is unquestionably favoring greater welfare provision.

“The current discourse about welfare expansion is a big change from the past,” said Ku In-hoe, professor at Seoul National University’s Department of Social Welfare. “Many politicians usually appealed to the public by depending on rapid economic growth rather welfare expansion. I think the changing discourse can affect social welfare policy in the future.”

Ku believes that greater welfare spending is necessary but says Koreans will also have to accept greater flexibility in the labor market and with it greater job insecurity.

“Globalization requires extending labor market flexibility. Some people argue against extending labor market flexibility but I think we have to accept the pressures of the global market. At the same time we have to expand social welfare programs for protecting low-skilled workers in the deteriorating labor market and especially irregular workers and workers in small and medium-sized enterprises.”

Kwon Soon-man, a professor at the School of Public Health at Seoul National University and an expert on welfare policy, believes that Korea in particular needs to increase its investment in public health care.

“We have a national insurance system. It has a universal coverage of the population … but in terms of benefits, simply speaking, the percentage of health care expenditure covered by the public health insurance system is still not universal. About 30 or 40 percent of health care expenditure is borne by individuals from out of pocket,” he told Voice.

Kwon rejects the suggestion of Korea following the example of the mostly private and highly rated health system of the Netherlands, which combines mandatory universal coverage with competing private health insurers.

Illustration by Han Chang-duk

“Still there are a lot of criticisms of that change as well so I don’t think it is a good example. If you have chance to talk with the general public, most people are more or less satisfied with this health insurance program. Of course, no system is perfect, we need some changes, some improvements, but some incremental changes are only needed then,” he said.

For Yang Jae-jin, a professor of public administration at Yonsei University, it is working families who should be the main focus of greater welfare.

“I would expand social welfare programs to support working families. So priority should be given to employment insurance and public child care. Also I would newly introduce so-called ‘parental insurance’ to socialize the cost of paid maternity leave at least for one year. This benefit should be income-related and paid by a parental insurance fund not by employers.”

Historically, South Korea has shunned high welfare spending. Some of the biggest moves toward a welfare state were made under the Kim Dae-Jung administration during and after the 1997 Asian Financial Crisis. But even with incremental increases since then, South Korea ranked second-lowest in the Organization of Economic Cooperation and Development for spending on welfare in 2010, accounting for just under 11 percent of GDP. This year’s budget, reflecting the current mood, increased welfare spending by 3.3 trillion won ($2.8 billion), including more money for college scholarships, free school meals and supporting job seekers.

But with the U.S. and much of Europe struggling with debt problems partly caused by heavy social spending, some here such as Kim Chung-ho, head of the Seoul-based Center for Free Enterprise, say that Korea should think twice before committing to the welfare state model.

“Korea is already going down the welfare road,” Kim said. “It is a dangerous road. People will have to be determined to continue working hard despite welfare handouts, also they will have to pay more taxes, which seems to be unlikely. So it could mean a trip down bankrupt road.”

Yang is less concerned that the two main parties’ focus on welfare could lead to competition to outspend each other with public money.

“Learning by doing will be activated in the next general election in 2016. The middle class will no longer support pro-welfare parties if winners of this election in 2012 raise taxes and increase budget deficits.”

While welfare proponents often point out it is the southern European economies that are most severely in debt rather than the likes of high-tax, high-spend Sweden, Kim dismisses the suggestion that the Nordic model could be applied here.

“There are some countries where people evade routinely evade taxes. South Korea is one of those countries that has a huge underground economy, just like in the Southern European countries. So in some countries, people may continue paying high taxes, but based on Korea’s low ranking in the transparency indexes, it seems that Koreans would evade taxes as people in Southern European countries do rather than the way they continue paying them in Scandinavian countries.”

With some level of welfare provision seemingly inevitable, the matter of degree is an important point of contention.

“There is no golden rate,” said Yang “, but I’d say 20 percent of GDP or the average level of OECD countries on the condition that Korean aging becomes a similar level to other OECD nations. Currently, Korea is young and its pension scheme is immature. Given this young population and immature pension schemes, 15 percent of GDP would be appropriate.”

While the Kim says he can understand and even support the targeting of services at the poor, he is vehemently opposed to “universal programs that include middle-class people, college students, rich people” such as Seoul’s free school lunches program.

But in Kim’s view, the most effective thing the government could do to help the poor would be to simply enforce the law of the land.

“That’s the most important thing the government can do. The government needs to stay focused on its basic functions so that honest people can succeed. Unfortunately, we now have a situation where charlatans can make money with lies, half-truths, backroom deals, corruption.”

Kim’s colleague at the CFE, international relations director Casey Lartigue argues that helping the less well-off is a matter of government doing not more, but less.

“Instead of focusing on social welfare spending, why shouldn’t Korea, for example, follow Sweden’s historical model of having free markets, free trade, and its policy of universal school choice?”

In a brief statement to The Korea Herald, the Ministry of Health and Welfare declined to go into specifics on desirable levels of welfare spending or how it would ensure sustainability.

“We are working to find the appropriate level of welfare expenditures that fits our policy environment and circumstances. We are making efforts to make the social security system sustainable considering fiscal conditions,” a spokesman said.

But whether a program or system is fiscally sound or not, Lartigue says the principle off hands-off government is important in itself.

“The right not to have the government take half of your money to set up programs gets ignored in the rush for welfare policies. So focusing on the big government scheme is a distraction from the relationship of the individual with the state. In the age of globalization, it may not make sense to be creating a Swedish model, thereby giving citizens less control over their money and lives,” he said.