[Exclusive] Youth Allowance and Basic Livelihood Security Increased... Democratic Party's New Welfare to Be Released Next Month

Hong Ik-pyo, Director of the Democratic Research Institute and Chairman of the Democratic Party Policy Committee
"Limitations of the Modern Welfare State Model... Need for Paradigm Shift"

Lee Nak-yeon, leader of the Democratic Party of Korea, attended the K-New Deal Committee National Crisis Recovery Headquarters inspection meeting held at the National Assembly on the 14th. Before the meeting began, he was seen talking with Kim Tae-nyeon, floor leader, and Hong Ik-pyo, chairman of the Policy Committee. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Park Cheol-eung] A new welfare system plan that provides social allowances to youth and raises the basic living security level will be announced by the ruling party next month. It will also include social insurance coverage for platform workers. The intention is to completely reform the welfare system paradigm to suit the times. Some parts of this plan will be implemented during the Moon Jae-in administration, while others will be proposed as pledges for the next presidential election. The welfare system reform will inevitably spark debates over universal versus selective benefits and raise issues such as fiscal soundness and tax increases, so discussions around this are expected to intensify throughout the year.

Hong Ik-pyo, chairman of the Democratic Party Policy Committee and head of the Democratic Research Institute, said in a phone interview with Asia Economy on the 27th, "The Democratic Research Institute has completed about 90% of the new welfare system plan and aims to finalize it by mid-next month, right after the Lunar New Year holidays at the latest." He added, "Afterwards, we will create social consensus and present key policies. Policies that cannot be implemented under the current government may be proposed as pledges for the next presidential election." However, the timing of the public release of the new welfare plan is still undecided. The new welfare plan is also a core task led proactively by Representative Lee Nak-yeon.

One of the representative measures is to provide a type of allowance to youth during life transitions such as employment, marriage, or independence. This aims to institutionalize youth allowances, which some local governments currently implement, at the national level. Hong said, "There are pensions for children and the elderly, but almost no welfare for the youth generation," adding, "Considering that, unlike in the past, it is difficult to find jobs even with the willingness to work, lifecycle-tailored welfare is necessary."

Especially in light of the increased difficulties faced by youth due to COVID-19, this is seen as an urgent task. Professor Yoon Hong-sik of Inha University’s Department of Social Welfare argued for the institutionalization of a 'universal social allowance' at a Democratic Research Institute-hosted forum last November, stating, "The COVID-19 pandemic confirmed that Korea’s labor market is highly vulnerable to external shocks." He emphasized, "Job losses are mainly occurring among low-wage workers and non-regular employees, making the economic risks for vulnerable groups very serious."

Within the Democratic Party, Representative Kim Du-kwan is advocating for a similar basic asset system. The idea is to provide 20 million KRW into a newborn’s account and apply interest so that by adulthood, the amount grows to 40 to 50 million KRW.

Another key proposal of the Democratic Party’s new welfare plan is to dramatically raise the basic living security level. Hong said, "The basic living security system was created during the Kim Dae-jung administration when the national income was just over 10,000 USD, but now it has reached about 30,000 USD, so changes are necessary." He added, "It is meant to guarantee a minimum standard of living, but compared to other countries, it is extremely low. It needs to be raised step by step in the future." For platform workers, the plan is to fill gaps where social insurance, including employment insurance, is not applied.

Hong stated, "The modern welfare state model has reached its limits, as judged by countries including those in Europe, and we need to respond from this perspective as well."

Kim Tae-wan, senior research fellow at the Korea Institute for Health and Social Affairs, recently analyzed in a report titled 'Intensification of Income Inequality and Policy Responses in the COVID-19 Era' that "The lives of traditionally vulnerable groups have been further constrained by COVID-19, and many new crisis households have emerged," concluding that "The most urgent policy alternative is to expand support for the poor and vulnerable groups."