Welfare pledges lack consistency, viability

By Korea Herald

Experts cast doubts over feasibility of candidates’ welfare pledges, criticize them of listing fragmentary policies to woo voters

  • Published : Dec 12, 2012 - 20:19
  • Updated : Dec 13, 2012 - 13:16

Welfare has emerged as a key issue on the campaign agenda of main presidential candidates Park Geun-hye and Moon Jae-in, but experts have criticized their pledges for lacking consistency and financial viability.

According to Herald Corp.’s manifesto review panel, comprised of leading academics, candidates have painted rosy pictures of Korea becoming a welfare state, but they have listed only fragments of pledges in an attempt to woo voters without presenting realistic ways to implement their plans.

Social security has been on the backburner in previous presidential elections as the nation strived to fight poverty and build wealth. After decades of brisk growth, the nation has a widening income gap and an aging population, bringing nursing, pensions, housing and generous public services to the fore in the 2012 presidential race.

Both Park and Moon laid out attractive welfare plans for better child care services, expansion of state medical support and bigger state subsidies and pensions. But those plans would trigger bigger problems such as increasing the burden on taxpayers and delivering the same level of benefits even to high-income earners, according to experts in the review panel.

“Candidates have just listed inconsistent and fragmentary welfare policies without drawing a big picture. Questions linger on whether they are capable of implementing their pledges without clarifying realistic ways to finance those plans,” the panel said.

Ruling party candidate Park brought a selective welfare system tailored to all ages while Moon laid out plans to deliver universal welfare plans.

“Park’s welfare policies are designed to deliver bigger benefits to low-income brackets and Moon’s plans highlight the need to safeguard the minimum level of income and increase medical support to them,” said Suh Chang-jin from Hanyang University’s School of Business.

The two candidates’ welfare pledges seem largely similar, but both have failed to convince voters of how they will implement the projects, which would involve massive public expenditure.

Park’s key campaign policies include providing free education for high-school students and expanding health care for the elderly and child benefits. Introducing one month’s paid paternity leave, so fathers can take care of their newborn babies, is also one of her welfare highlights. Park said her government would create 27 trillion won a year, or 135 trillion won over the next five years, by reducing inefficient government spending and expanding tax revenue.

The panel said Park’s approach of defining who would be the recipients increased her pledges’ viability, as did her proposal to build a stable welfare financing system.

“If we look into not only where the benefits would go but also who will be responsible for resources, Park’s policies are better (in regards to balancing the two),” Lee Suk-won, professor of Seoul National University’s Graduate School of Public Administration.

However, experts criticized that her plans were incoherent. Her pledges would not raise the level of social security or public medical provision at all. For instance, she pledged to offer full insurance coverage to patients with four major diseases such as cancers and cardiac disorders, saying this is a way to improve the rate of health insurance coverage to 80 percent from current 62 percent. But it is impossible, experts said.

“It is like deceiving the public by proposing pledges without a simple calculation,” said Sangmyung University Hong Young-joon.

“Park’s pledges may look as if they would cost less than Moon’s, but her disparate campaign policies, if carried out without a broad welfare infrastructure, would fail, and this would end up wasting money,” he said.

Meanwhile, experts said Moon has introduced more organized and detailed welfare plans than Park when evaluating the quality of the proposals.

“(Moon’s) pledges are well organized and have well delivered the candidate’s strong will. Moon is better than Park when comparing the two solely on the quality of their welfare packages,” Hong said.

Announcing his ambition to become “the first president of Korea as a welfare state,” the left-wing politician pledged to increase state benefits and halve the costs of child care, education, medical services and those associated with old age.

He promised more detailed welfare plans than Park, such as doubling the monthly elderly pension to 180,000 won by 2017, and introducing jobseekers’ allowance and 100,000 won per month in child support for those raising children under the age of 12.

The DUP candidate’s plans also include placing a 1 million won ceiling on annual medical costs that need to be covered by the individual and covering all tests and treatments with proven efficacy with National Health Insurance.

Moon’s plans may have synergy effects because they are related to one another and, importantly, are designed to create jobs, experts said. The DUP candidate claimed that his welfare package would create 400,000 jobs including day-care teachers, caregivers and social workers.

Experts, however, cast doubts over the feasibility of Moon’s welfare pledges. The opposition DUP plans to increase the maximum corporate tax rate, income tax targeting the high-income earners to collect 18 trillion won per year. He said he would cut down unnecessary spending to finance the rest.

But, his policies would cost even more than his calculation of 192 trillion won for next five years.

“(The candidate) brought a series of pledges that constantly require state resources from taxation but didn’t give details on how to finance those resources,” Lee said.

“His pledges would hurt the efficiency of state finances because it would require massive government spending. But it would likely have a little impact on income distribution because the plans also include offering subsidies to children and senior citizens, regardless of their income level,” Lee said.

In addition, experts criticized Moon’s universal welfare plans appear to be steeped in populism and would trigger the problem of moral hazard among patients if the government starts to cover substantial medical expenses.

By Cho Chung-un (