[Exclusive] Seoul City to Provide Guaranteed Income to Bottom 25% Earners... Up to 910,000 KRW per Month for Single-Person Households

Seoul City to Launch Pilot Project Next Month
500 Households Selected from Bottom 25% Income
Half of Median Income Difference Paid in Cash
Implemented for 3 Years Starting January Next Year

[Image source=Yonhap News]

[Asia Economy Reporters Jang Sehee and Lim Chulyoung] Seoul City will officially launch the ‘Seoul Anshim Income Pilot Project,’ a key welfare policy of Mayor Oh Se-hoon, starting next month. The project will provide cash support amounting to 50% of the shortfall from the median income to low-income households in the bottom 25% income bracket (below 50% of the standard median income). As it is a pilot project, the target is limited to 500 households. Seoul City estimates that single-person households will receive up to 914,000 KRW per month, totaling 10,966,000 KRW annually.

According to Seoul City and the Ministry of Health and Welfare on the 4th, Seoul City will proceed with the ‘Seoul Anshim Income Pilot Project’ based on these details. After selecting experimental households through a public announcement in September, payments will be made over three years from January next year to December 2024. The Welfare Policy Office, the department in charge, already reported the project direction and payment criteria to Mayor Oh on the 2nd. A Seoul City official explained, "We plan to actively coordinate not only with the Ministry of Health and Welfare but also with the Seoul Metropolitan Council."

Oh Se-hoon’s ‘Anshim Income’: "Protecting Vulnerable Groups More Thoroughly Through Welfare"

Anshim Income is an income compensation system that pays half of the difference between the median income and the income of households below the median income. Seoul City has narrowed the target from the bottom 50% income bracket to the bottom 25%, providing the difference from the median income in cash. For example, a four-person household with an annual income of 20 million KRW would receive 20 million KRW in cash, which is half of the 40 million KRW difference from the median income (60 million KRW). The city estimates that single-person households will receive up to 914,000 KRW per month, or 10,966,000 KRW annually.

The number of supported households has increased from the previously announced 200 to 500, and 1,000 households will be classified as a comparison group to analyze the payment effects. There are 1.21 million households in Seoul in the bottom 25% income bracket, of which 270,000 are basic livelihood security recipients and 48,000 are in the near-poverty group, leaving about 890,000 households in the non-recipient poverty blind spot. The required budget is 6.886 billion KRW, fully funded by the city. To maximize the purpose of selective welfare, a cutoff criterion of 326 million KRW in net assets will also be introduced. This cutoff will follow the Seoul-type emergency welfare support asset standard of 326 million KRW, which was temporarily relaxed due to COVID-19.

Experts: More Effective Than Basic Income, But Must Connect with Existing Welfare Systems

However, it is questionable whether this support will effectively resolve welfare blind spots. Professor Sung Tae-yoon of Yonsei University’s Department of Economics said, "Anshim Income focuses on low-income groups, so it is more effective than basic income and has less fiscal burden," but added, "If it is not linked with existing welfare policies such as the Earned Income Tax Credit (EITC) and unemployment benefits, there could be overlap issues."

Professor Andonghyun of Seoul National University’s Department of Economics said, "If financially capable local governments competitively implement income compensation policies, regional disparities could worsen," adding, "There is a risk of adverse effects that hinder balanced development between central and local governments."

Meaningful results on the effects of basic income have not yet been derived overseas either. The Finnish experiment, which was discontinued after two years, showed negative results indicating that basic income reduced work motivation. Another problem is the increased fiscal burden if existing welfare systems are not restructured.

Meanwhile, consultations with the Ministry of Health and Welfare and the Seoul Metropolitan Council remain before actual implementation. The Ministry of Health and Welfare has reportedly stated that more time is needed to comprehensively review the consistency with current welfare systems such as the National Basic Livelihood Security System.