Abstract
The purpose of this article is to re-examine the perspective on the relationship between East Asia’s growth economy and its underdevelopment of state welfare, by analyzing the Korean case between the 1960s and the 1980s, when active governmental intervention in the economy led to rapid economic growth. This article aims to answer the questions ‘Was state welfare genuinely underdeveloped under the growth economy of East Asia?’ and ‘If so, which factors hindered its development?’ To this end, this article first refutes the perspective regarding the underdevelopment of state welfare in East Asian growth economies, through an empirical analysis of the following: overlooking diverse indices in measuring the level of state welfare, a comparison without considering different budget systems, negligence of output aspects, giving undue value to quantitative methods and paying little attention to welfare beneficiary aspect. The article traces the reasons why the growth economy experienced the underdevelopment of state welfare using comprehensive frameworks: large-scale resource distribution to defense and education, low level of electoral competition, underdevelopment of socialist political parties, political authoritarianism and weak opposition, lack of social citizenship and preservation of family values, underdevelopment of trade unionism, and inactivation of civil society.
Introduction
During the period of economic growth in East Asian countries, including South Korea (hereafter Korea), the government preferentially allocated scarce resources to economic and industrial policies. The government played a pivotal role in the process of propelling economic development, mapping out development plans, selectively distributing foreign loans and policy funds, and even coordinating production items between private enterprises. C. Johnson (1982) coined this type of East Asian country as ‘developmental state’ (DS).
Developmental welfare state (DWS) theorists grafted the idea of the DS onto social welfare discipline. The key contention of the DWS, among others, is that state welfare was underdeveloped in East Asian growth economies, as scarce resources were preferentially input into economic and industrial policies (Y Lee and Ku, 2007). The DWS attributes the underdevelopment of state welfare in East Asia to this prioritization of resources. Social welfare was marginalized during the period when resources and accumulated capital were scarce. Many scholars in East Asia as well as the West concur with this contention.
However, while the DWS clearly highlights the causes of the underdevelopment of state welfare in East Asian growth economies, it leaves some questions that must be given more attention. It neglects to consider the different situations that individual countries confronted during the period of economic growth, by treating them as a single bundle. Moreover, the DWS judges the underdevelopment of state welfare by evaluating a single facet of welfare expenditure, failing to grasp the complexity of state welfare. Further, the DWS places undue value on the economic interpretation of welfare development. In reality, the factors that influence welfare development are diverse and complicated.
Against this backdrop, the purpose of this article is to re-examine the prevailing perspective on the relationship between East Asia’s growth economy and the underdevelopment of state welfare, by analyzing the Korean case between the 1960s and the 1980s, when active governmental intervention in the economy led to rapid economic growth. This article aims to answer the questions ‘Was state welfare genuinely underdeveloped under the growth economy of East Asia?’ and ‘If so, which factors hindered its development?’
To this end, this article first debates the theories relating to East Asia’s developmental state, the relationship between the DS and state welfare, and the DWS theory regarding the underdevelopment of state welfare in East Asia. The next section refutes the DWS’s contentions on the underdevelopment of state welfare in East Asian growth economies, through an empirical analysis of state welfare in Korea. The following section traces the reasons why the growth economy experienced the underdevelopment of state welfare using comprehensive frameworks. This article concludes with constructive criticism on the DWS’s limitations in comprehensively grasping the reality of state welfare under the growth economy.
Theoretical underpinning and research framework
Underdevelopment of state welfare in East Asian growth economies
‘The developmental state’ concept is used to portray East Asian growth economies. The DS is a state that actively intervenes in the management of the economy and industry through capable and efficient bureaucracies, in order to achieve its primary goal of economic growth and industrialization (Johnson, 1999). The term was conceived by C. Johnson (1982) in order to explain the ‘plan-rational interventional state’ in East Asia, as a third type of state differentiated from the ‘market-rational regulatory state’ in Western countries and the ‘plan-ideological state’ of socialist countries. The interventionist state in East Asia placed the highest priority on economic growth and preferentially distributed the country’s scarce resources to economic and industrial policies. Under the DS, policies that do not fall within the purview of furthering the economy and industry play an auxiliary role in achieving the nation’s goal of economic growth (Chang, 2004). The DS understood social welfare as conflictual with economic growth, and alleged that income maintenance for the poor weakens their motivation to work, while welfare expenditure diminishes the government’s capacity for economic growth. The DS was concerned that social welfare would impede the country’s growth potential, and therefore social welfare was deemed to be delayed during the period of economic growth.
In a similar vein, a variety of theories argue the underdevelopment of state welfare in East Asian growth economies. These include the theories of the Confucian welfare state, productivist welfare capitalism, the developmental welfare regime, and welfare developmentalism. However, with the exception of the Confucian welfare state theory which adopts a cultural deterministic approach, the general contentions of each theory are similar, although they employ different terminology. They advocate a state-centric perspective that emphasizes the state’s active role, and acknowledge the subordinate role of social welfare during the period wherein economic growth was the state’s core goal. Consequently, state welfare became underdeveloped.
Confucian welfare state theory, conceived by C. Jones (1993), enumerates conservative corporatism excluding laborers, the principle of complementation without the church, solidarity without equality, and the welfare state based on familyism as the characteristics of the Confucianism-based East Asian welfare system. According to this theory, informal and voluntary welfare was pivotal in East Asia, retarding the development of state welfare.
Since the mid-1990s, studies have interpreted social welfare under the DS from a state-centric perspective. Holliday (2005) created the term ‘productivist welfare capitalism’ to describe the East Asian welfare system and listed it as the fourth type of welfare system next to Esping-Anderson’s (1990) welfare system typologies of liberalism, conservatism and social democracy. According to Holliday, the East Asian welfare system took a different path from that of Western countries, developing a welfare policy emphasizing productive working strata. Productivist welfare capitalism is characterized by the existence of a growth-oriented state, the subordination of welfare policy to economic policy, and the minimization of social rights. Accordingly, welfare policy lacks its own logic of development.
Tang (2000) listed the following as the common welfare policy strategies in East Asian growth economies, which led to the underdevelopment of state welfare. Economic growth would increase income level and its benefits would spread throughout the whole population. While welfare expenditure shares a relatively small portion in total public spending, it primarily targets politically important groups, such as public officials. Even though public welfare programs are established, they are smaller in scope and benefit level. Holliday and Wilding (2003) asserted that economic growth and full employment were the main engine of welfare, and productivist welfare was the goal in East Asian growth economies. The family was required to take more welfare responsibility for its members. Economic development was a core value and took a priority over welfare policy in East Asia.
A number of scholars used the term ‘developmental welfare state’ to explicate how welfare policy is structurally constrained to facilitate economic growth in East Asia. In this type of welfare state, certain welfare policies, such as healthcare and education, developed even under the DS, whereas cash welfare lagged. Kwon et al. (2009) introduced the term ‘welfare developmentalism’ to understand the subordination of welfare to economic growth under the DS, but this concept is not different from the existing perspectives on the delayed development of welfare in East Asia.
Among various competing terms, the term ‘developmental welfare state’ is widely utilized to describe the welfare system in East Asian growth economies. In detail, late industrializers in East Asia pursued rapid economic growth in a short period through the government’s active intervention in the economy. These countries were deficient in natural resources and possessed limited internal markets. Accordingly, economic growth was indispensable for their very existence and selective allocation of scarce resources was required.
The DWS’s core claim is that state welfare is underdeveloped or delayed in East Asia under the state-led growth economy, mainly because scarce resources should be distributed to economic growth preferentially. This is largely due to the incapability to allocate state funds towards welfare policy (Aspalter, 2006; Yang, 2017). Accordingly, they adopted an economic growth-first policy, naturally neglecting welfare policy. To assert this allegation, the DWS refers to welfare expenditure in each country, with a particular focus on its proportion to gross domestic product (GDP).The DWS furthered its explanatory persuasiveness by contrasting East Asia’s lagging welfare with the welfare advancement in the West.
Under this major contention, the DWS regards the slight existence of state welfare under the growth economy as an instrument of economic policy (Hort and Kuhnle, 2000). Welfare policy does not function as an end goal in itself, but rather acts as a subsidiary to support economic growth. Welfare policy should facilitate capital accumulation, protect and promote labor forces, and support industrial policies by reducing the social security costs of companies. The DWS also contends the spillover effect of economic growth into welfare policy (Beeson, 2004). To the DWS, economic growth and distribution are not at odds but interlocked with each other. When economic growth is first achieved, the matter of distribution can be naturally solved through job creation and income maintenance (Broadbent, 2006).
Research framework
With regard to the framework of debates, this article’s main contents consist of two parts – pointing out the incompleteness of the DWS’s assertions regarding the underdevelopment of state welfare in East Asian growth economies and suggesting a comprehensive explanation on the reasons why state welfare was underdeveloped in East Asian growth economies. Regarding the first part, this article suggests the following as the weak points of the DWS’s diagnosis of the realties of state welfare underdevelopment in East Asian growth economies: the excessive simplification in measuring the level of state welfare; overlooking the difference in national budget systems between countries; the negligence of output aspects; methodological bias toward quantitate metrics; and inattention to welfare beneficiaries.
With reference to tracing the reasons why state welfare was underdevelopment in East Asian growth economies, this article adopts more systematic and comprehensive approach, including political and social factors as well as economic factors. The DWS is menaced with economic determinism that puts an overemphasis on economic factors – the priority order of resource distribution. The following items are used to illuminate the comprehensive factors: a necessity of large-scale resource allocation to defense and education; political factors including a low level of electoral competition, underdevelopment of socialist parties, and authoritarian politics and a weak opposition system; and social factors including the lack of social citizenship and the preservation of family solidarity, underdevelopment of trade unionism, and inactivation of civil society. Figure 1 delineates the simplified research framework of this article. A time span of analysis is South Korea between 1960s and the 1980s, when rapid economic growth was accomplished through the active governmental intervention in the economy. Data for the analysis are collected from the official statistics and annual reports of the Korean government.
The simplified research framework of this article.
Was state welfare genuinely underdeveloped in East Asian growth economies?
The DWS’s key contention is clear and simple: state welfare was underdeveloped in East Asian growth economies due to the preferential distribution of scarce resources to economic and industrial policies. Indices used to evaluate the degree of welfare underdevelopment were the amount of public welfare expenditure or its ratio to GDP or overall government budget. The DWS contends that total expenditure on welfare is small and its rate to GDP is much lower compared to those of Western developed countries (Kwon et al., 2009; Y Lee and Ku, 2007). This was because the growth economy placed an exclusive priority on economic growth.
In Korea, between the 1960s and the 1980s, welfare expenditure was minuscule in terms of both total amount and its ratio to GDP. Meanwhile, economic growth was very high during this period. Following the promulgation of a five-year economic development plan in 1962, the average economic growth rate recorded 9.67% in the 1960s, and the total GDP increased from 2.3 billion dollars in 1962 to 8.1 billion dollars in 1970. Total exports increased 14.2 times during this period. Korea’s economic performance in the 1970s was marvellous: GDP increased from 8.1 billion dollars in 1970 to 62.7 billion dollars in 1979 and per capita GDP rose from $253 to $1647. Average economic growth rate was 8.5%. The Park government successfully shifted the focus of the country’s economic development strategy in 1973 from light industry to heavy and chemical industries (Pirie, 2008). Economic growth continued under the Chun Doo-hwan government (1981–1987). Economic growth rate averaged 9.1% under the Chun government, and per capita GDP increased from $1597 in 1980 to $3218 in 1987, while exports increased $17.5 billon to $47.3 billion (Statistics Korea, 1998). However, welfare expenditure lagged far behind in all the indices where longitudinal comparison is possible, including raw amount, ratio and growth rate. In this respect, the DWS’s contention has considerable persuasive power. However, while partially admitting the DWS’s contention, it is necessary to reappraise its relevance in terms of the following aspects.
Overlooking diverse indices in measuring the level of state welfare
While it is acceptable to use the total volume of welfare expenditure or its ratio to GDP as indices to measure the level of state welfare, the DWS places a disproportionate weight on quantitative indices. In practice, welfare expenditure is just one dimension to measure the welfare level of country. Other indices, such as the advancement of welfare institutionalization, the increase of welfare organizations and personnel, and the expansion of welfare coverage and beneficiaries, can also be counted (Kim et al., 2017). These can take different paths from welfare expenditure. In Korea, while the total volume of welfare expenditure was small under the growth economy, welfare institutionalization greatly advanced during the same period. Numerous welfare laws and institutions were established between the 1960s and the 1980s. However, some of them proved ineffectual or their implementation was postponed. The implementation of welfare legislation, such as the Medical Insurance Act, the Livelihood Protection Act 1 and the Child Welfare Act, was postponed in the 1960s, and the National Welfare Pension Scheme of 1973 was suspended indefinitely. This was due to the unwillingness of policy makers, financial incapability and the unreality of the legislation (Hwang, 2006).
Welfare organizations and personnel are also important indices. Although they tend to expand proportionately alongside increases in welfare expenditure, this is not always necessarily the case. In Korea, welfare organizations, departments and staff consistently increased and differentiated, irrespective of welfare expenditure. Further, semi-governmental agencies, such as the Medical Insurance Corporation and the National Pension Insurance Corporation, also continued to expand. However, the budgets of these agencies are not included in formal welfare expenditure, as they are managed separately from the national budget system.
The coverage and beneficiaries of state welfare also saw ongoing increases under the growth economy. Like Western countries, Korea also shifted its welfare coverage from selective towards universal. Until the 1970s, welfare beneficiaries were limited to the destitute, employees in large companies, and special occupational groups such as public servants and career soldiers (Yang, 2017). In the 1980s, welfare coverage was extended to employees in small companies, farmers and seamen, as the Chun government emphasized the ‘building of welfare society’ as the bedrock of economic and social development (Heo and Roehrig, 2011).
Differences in budget systems
The next debate is related to the relevance of international comparison of welfare expenditure between countries that have differences in the structure, category and system of their government budget. The first point of debate is how the scope of welfare and welfare expenditure are set. Currently, the concept of ‘(social)welfare’ is utilized in a broad and poly-semantic manner. The reference range of welfare fluctuates according academic disciplines, political ideologies and each country’s stage of economic development (Stern and Axinn, 2017). Naturally, we are prone to committing the fallacy of comparing different things using the same standard. In Korea, the scope of welfare has changed throughout different periods, and welfare budget has been diffused among various government departments. Moreover, the jurisdiction of these departments has often changed in line with government restructuring. Accordingly, it is difficult to conduct a longitudinal comparison of welfare expenditure between countries and even within the same country.
The second point concerns the reliability of statistical data on welfare expenditure. In Korea, statistics were poorly computerized until the 1980s and welfare-related data were inconsistent even among government agencies such as the Bank of Korea and the welfare department. Thus, data were recorded inconsistently across time.
The third issue relates to the differences in the budgetary system of each country. When we compare levels of welfare expenditure between countries, we must consider the items, classification system and special accounts of the national budget system. However, the DWS tends to evaluate the level of welfare expenditure by referencing the general accounts of the central government, thus forgoing the totality of government budget. Specifically, the DWS counts welfare expenditure by evaluating the total amount spent and neglecting the sub-categories of the budget. We can properly understand the level of public expenditure after considering special accounts and accounting for public enterprises. In general, special accounts in developing countries are larger when compared to developed countries where the parliament exerts greater power over budgetary deliberation. This is in order to evade parliamentary control over budget items (McCombie and Thirlwall, 2016). In Korea, a great deal of welfare expenditure occurs within public corporations such as the National Pension Service and the National Health Insurance Corporation, whose budgets are managed separately from government spending. Further, central government budget scopes fluctuate between countries according to the degree of each country’s decentralization. It is generally the case that countries with a higher level of local autonomy spend more at the local government level (Psycharis et al., 2016). Thus, although we can admit that state welfare was generally underdeveloped in East Asian growth economies, there is a limitation to the certainty with which we may allege such a claim, when the scope of budgetary items, the budget system and the reliability of welfare statistics are inconsistent between countries.
Negligence of output aspect
The DWS places its focus on input – that is, welfare expenditure – and neglects the output aspect of state welfare. A large quantity of welfare expenditure does not necessarily guarantee high-quality welfare, since input does not yield a consistent output ratio. The resulting output of welfare expenditure, such as wealth distribution and social equity, should be duly considered. Such metrics as a country’s Gini coefficient, the percentile of income distribution, and the wage gap by academic background or gender should be included in assessments of the welfare level of countries. Western countries also experience slowdowns and obstacles in income distribution and degradation in welfare service quality, despite consistent increases in welfare expenditure (Forrest and Murie, 2014). If funds are wasted through inefficient management, this will reduce the quality of welfare provision. Accordingly, Western welfare states have worked to expand private-sector welfare in line with the trends of neo-liberalism and welfare pluralism. For example, the British Thatcher government pursued policies to privatize welfare and medical services, reduce the welfare budget, promote private education and increase co-insurance rates under the ideology of anti-collectivism, and the United States enacted policies to reduce public assistance, restrict eligibility for welfare benefits and transfer federal welfare programs to state governments (Plant and Hoover, 2014).
In sum, while using expenditure as a metric simplifying the process of comparison, we cannot judge the welfare level of a country simply focusing on the input factor. We must develop a comprehensive and systematic perspective that incorporates input, process and outputs, in order to holistically evaluate welfare systems.
Placing undue emphasis on quantitative metrics
The DWS depends primarily on quantitative indices to measure state welfare. Among various indices, welfare expenditure is the easiest index to quantify. Even though it is possible for numerical values themselves to be inaccurate, it is undeniable that welfare expenditure is one of the most objective indices that can be used to produce statistics and make comparisons. Accordingly, a great majority of research seeking to compare welfare levels and identify influencing factors in welfare development utilize welfare expenditure as an index. However, welfare levels cannot be accurately evaluated by relying solely on quantitative methods. Even though private resources, such as volunteering and donation, are not counted as part of public welfare expenditure, they are a critical input in welfare services. The quality of welfare services and programs, as well as the satisfaction of welfare beneficiaries and ease of accessing services, is as important as quantitative indices in measuring welfare levels (DiNitto and Johnson, 2015). In the same vein, qualitative principles, such as accessibility, integration and linkage, are considered to be as important as quantitative indices in evaluating welfare service delivery systems. Although we inevitably attach weight to quantitative indices, it is vital to acknowledge their limitations in mapping out a complete picture of welfare levels.
Paying little attention to welfare beneficiaries
The DWS attaches excessive importance to the supply side of welfare expenditure, ignoring the aspect of welfare beneficiaries. The ultimate goal of welfare policy is to supply satisfactory services to the general population or specified beneficiaries (Stern and Axinn, 2017). Measuring welfare levels by evaluating welfare expenditure is to regard welfare from the supplier viewpoint. Even if welfare services are sufficient, a state’s welfare level cannot be evaluated highly if they are delivered to irrelevant targets. Moreover, the priority of welfare eligibility should be counted as a significant factor in providing welfare services, and placing the sole focus on welfare expenditure fails to consider this matter of priority. Theoretically, welfare services should be prioritized to the neediest, but, even in Western counties, state welfare has given priority to workers in large companies with relatively stable employment (Thane, 2016). In Korea, state welfare, particularly social insurance, has been preferentially applied to special occupational groups with high job stability such as public servants and school teachers. Even among private occupational groups, eligibility for social insurance was incrementally extended from employees in large companies to those in small companies, farmers and finally the urban self-employed (Yang, 2017). This order is inconsistent with the urgency of welfare protection.
Likewise, the increase of welfare expenditure does not necessarily guarantee the provision of a high quality of welfare services for beneficiaries; therefore, a multi-dimensional analysis is required to measure welfare levels.
Why was state welfare underdeveloped in East Asian growth economies?
Large-scale resource distribution to defense and education policies
While we acknowledge the underdevelopment of state welfare in East Asian growth economies, we need to debate whether it was truly due to the preferential allocation of resources to economic and industrial policies, as the DWS contends. In order to do this, we first need to examine the general structure of the national budget, explore the diverse sources of economic expenditure and compare these with other major budgetary items.
It is true that there was a large gap between the budget allocated to economic development, such as social infrastructure investment and subsidies for export companies, and welfare expenditure (see Table 1). In this regard, the DWS’s contention seems persuasive.
Changes in the composition of government expenditure (selected years).
(Unit: hundred million Won, %).
However, detailed examination reveals a more sophisticated picture. Diverse factors were engaged in determining the level of welfare expenditure. In terms of budgetary structure, expenditure for economic and industrial policy was largely met not by general accounts but by special ones. Expenditure through public enterprises also occupied a large proportion of the budget for economic development. In addition, until the 1960s, a large portion of capital needs for economic development was covered by grant-type aids from abroad and compensation funds from Japan, which were excluded from formal statistics (Kwon et al., 2009). In the 1970s, the amount of grant-type aid received decreased to a negligible amount, and economic expenditure was largely met through public loans from abroad and the government’s grantee payments on private loans, which were also excluded from official budget. Thus, a review of formal general accounts is inadequate to precisely grasp expenditure scale. Rather, we need to understand the budgetary system and apprehend the hidden parts of the budget.
Until the 1970s, the budget allocated to economic expenditure had to be relatively large in order to meet development goals, as significant capital was needed to build infrastructure, including roads, industrial complexes and power plants. However, in the 1980s, infrastructure investment decreased significantly. The need for basic infrastructure construction diminished and private capital and foreign direct investment increased. Although the formal budget reflects direct government spending, economic policies were furthered through diverse financial instruments that are not included in these figures, rendering simple comparison between economic and welfare expenditures irrelevant.
The necessity for large-scale national defense spending also significantly constrained welfare expenditure. Korea’s economic growth coincided with Cold War period internationally and the military regime domestically. Both the Park Chung-hee and the Chun Doo-whan governments constructed a garrison state based on total security posture under intimidation from North Korea. These geopolitical and military contexts demanded significant defense budget for the very survival of the country and constrained the portion of welfare expenditure. Studies have shown that welfare expenditures correlate most closely with defense expenditure, increasing as defense spending decreases and vice versa (Yildirim and Sezgin, 2002). This theory was corroborated by the Reagan administration of the United States, which carried out large-scale welfare reduction in exchange for the reinforcement of national defense.
Large expenditure on education also influenced the degree of welfare expenditure in Korea. Korea, embracing Confucian values, placed a great emphasis on education. When the capacity of the private sector was feeble, the majority of education was funded by public spending. Due to this prioritization of education, Korea’s literacy rate was much higher than other countries at a similar economic level (Kihl, 2015). It was national policy to strengthen job training and educational programs along with the beginning of full-scale industrialization in the 1960s. Investment in human capital to propel economic development was critical in a country with scarce natural resources. Well-educated and capable human resources were key driving forces behind Korea’s economic success (Seth, 2010).
Politics matters
Low level of electoral competition
The level of democracy, the electorate system and electoral competition greatly influence the degree of welfare expenditure in a country. Intense competition in presidential and general elections under democratic politics significantly contributes to increased welfare expenditure (Häusermann et al., 2013), because political parties propose various welfare pledges in an effort to win voters. Many of these welfare pledges are implemented after elections, increasing welfare spending. In Korea, even though several levels of elections were held under the growth economy, their impact on welfare expenditure was limited, as the military regimes restricted electoral competition. Presidential elections were quite competitive in the 1960s, but they became ceremonial due to the introduction of the indirect presidential election system under the 1972 Yushin (revitalizing reform) Constitution. The National Council for Unification, a puppet political organization to the ruling bloc, unanimously elected Park Chung-hee as president without competition. The Chun Doo-hwan government subsequently changed the election system to an American-style electoral-college system, but the reality did not change. Chun obtained an absolute majority of votes by eliminating main opposition politicians from candidacy (Shim, 2004). Even though parliamentary elections were somewhat competitive in the 1960s, citizens paid little attention compared to presidential elections. In the 1970s, parliamentary election competition was further lowered as the ruling party could secure an absolute majority owing to the Yushin Constitution that allowed the president to nominate a third of the total number of parliamentary members. Even in the 1980s, the ruling party’s domination was guaranteed by the medium electorate system. Key opposition politicians were prohibited from political activities, further lowering electoral competition.
The impact of political events, such as a military coup, was influential in extending state welfare. Welfare was used as a means to legitimize illegal coups. However, welfare spending did not increase; rather, the government promoted welfare institutionalization. At the time, Korea had a minuscule capacity to invest in welfare and the government instead promised welfare institutionalization. Another political event was the opening of inter-Korean dialogue in the early 1970s. This provided an opportunity to introduce a health insurance program in 1976, as the dialogue revealed the details of the North Korean healthcare system (Yang, 2017). While this political event contributed somewhat to welfare institutionalization, it did not lead to a substantial increase in welfare expenditure, as the government forced individual health insurers to operate on a self-financing basis (Chun, 2005). Further, although minor electoral competition was present in the 1960s and the mid-1980s, welfare issues were not emphasized, as votes were largely determined by nepotism and regionalism under a strong parochial political culture (Helgesen, 2014). Voters did not portray a keen interest in welfare pledges, and such pledges did not appear to substantially influence their choices.
Underdevelopment of socialist or progressive political parties
For a long period, conservative political parties dominated Korean politics, mainly due to the geographical characteristics of the Korean Peninsula which left Korea surrounded by hostile communist countries. Until the 1990s, all of the major ruling and opposition parties were conservative (Shim, 2004). There was no regime change between conservative and liberal parties during the period of the growth economy. The Park Chung-hee government even prohibited the founding of socialist parties under the pretext of South–North confrontation. 2
Meanwhile, the Chun government oversaw the foundation of socialist parties with the aim of improving the relationship with socialist governments in Europe and the Third World. However, they remained puppet satellite political forces to the military regime 3 and consequently could not contribute to promoting welfare. Conservative main opposition parties focused their attention on democratization and the termination of military rule (Kihl, 2015). Korea’s political conservatives paid little attention to the realization of the welfare state. Instead, regionalism controlled the Korean political landscape for a long time, excluding welfare agendas from the people’s concerns.
Political authoritarianism and the weak opposition system
East Asian growth economies established authoritarian political systems primarily under the pretext of achieving rapid economic growth and protecting the country from hostile neighbors. They did not place a high priority on welfare, as they selected a strategy to stabilize the governing system by delivering economic success. Moreover, they all faced constant intimidation from neighboring countries, which required a large amount of defense spending. Accordingly, they placed a priority on economic growth and national defense, thus neglecting redistribution and welfare in allocating scarce resources.
Meanwhile, the power of opposition parties was generally trivial under authoritarian rule. In Korea, the power of opposition parties was significantly reduced by three parliamentary resolutions, banning key opponents from engaging in political activities, the passage of the Yushin Constitution that provided the president with the power to nominate one-third of parliamentary members, and ongoing political surveillance by espionage agencies. At this time, parliament essentially functioned as a rubber stamp that accredited government policies (Y Kim, 2003). Moreover, until the 1980s, the main concern of opposition parties was the struggle for democracy, which left welfare off the main agenda.
Disadvantages in social conditions
Lack of social citizenship and the preservation of family values
Before democratization occurred in the late 1980s, the concept of social citizenship was not prevalent in Korea, and, as a result, the people did not conceive of welfare as a right. There were few requests for welfare under the growth economy. Even in the West, the concept of social citizenship, which TH Marshall systematized academically, has prevailed since the 1950s when the welfare state was established. The idea of social citizenship emerged after democracy took root and the welfare state was consolidated (Dwyer and Wright, 2014).
Further, although urbanization progressed beginning in the 1960s, together with industrialization, Korea’s Confucian traditions, such as filial duty and family support within the extended family system, remained (Yao, 2010). Self-help within the family system and mutual aid between community members could minimize the demand for state welfare, by satisfying large parts of welfare needs within the family system. In the West, welfare needs resulting from the problems of poverty, exclusion and lack of housing increased as urbanization progressed, and this in turn spurred welfare spending (Mishra, 2014). However, in Korea, although urbanization progressed considerably under the growth economy, family support tradition was quite well preserved and alleviated the need for state welfare up until quite recently. The long-cherished family values of respect for the elderly and practicing filial piety towards parents do not disappear overnight. The welfare needs of elderly people and children could be met by the family system and the private sector, reducing the demand for state welfare. 4
Underdevelopment of trade unionism
The lack of trade unionism and the state’s effective control of trade unions were also important factors in reducing the pressure for state welfare. According to Korpi’s (2006) power resource theory, the development of trade unions and pro-labor parties plays a key role in the development of the welfare state. Mishra (2014) also regards the numerical increase and organization of factory workers and the emergence of labor parties as key factors that spurred the creation of the European welfare state. An example is the Swedish welfare state, which has been sustained by the social pact between strong trade unionism and socialist political regimes.
In Korea, all trade unions were dissolved by the 1961 military coup and then restructured by the government. In this process, the military regime excluded uncompromising trade unions, and ordered the establishment of the Federation of Korea Trade Unions (FKTU) (W Lee, 2013). Accordingly, trade unions were inherently pro-government and controlled by the government through diverse mechanisms of constraints and inducements, such as the co-optation of union leaders, the selective provision of financial subsidies and steering of the leadership selection process. In the 1970s,the Yushin government cracked down on labor strikes by mobilizing coercive state apparatuses such as the police, the prosecutor’s office and intelligence agencies (Yoon, 2011), as exemplified by the suppression of the Dong-il Textile trade union. The government mobilized a variety of methods, such as the establishment of Labor-Management Council at workplaces, in order to incapacitate union activities. Throughout the 1970s, the total number of recorded labor disputes was just 735 and there were only 88 lost days (Ministry of Labor, 1997).
The suppression of trade unions was reinforced with the emergence of the Chun Doo-hwan military regime in 1980. The Chun government expelled 191 union activists in 1980 as part of the Social Purification Movement and revised labor laws to tighten control by introducing the company-based union system (Ministry of Labor, 2006). As a result, pro-government trade unions, led by the FKTU, actively supported government policies. Thus, pressure from trade unions for welfare was limited. Meanwhile, the Chun government oppressed trade union movement, as was shown in the case of its suppression of labor strikes by the Guro Industrial Complex Union in 1985 (Koo, 2007).
Inactivation of civil society
While the presence of active civil society contributed to the development of state welfare in Western countries, Korean civil society was constrained under the military regimes until the late 1980s. Some civic groups, such as student associations and anti-government religious groups, opposed government policies, but their main target was to advocate democracy. Civic groups advocating welfare were non-existent, with the exception of some charity organizations. Military regimes regarded advocacy civic groups as illegal and suppressed their activities, through diverse methods of state violence ranging from physical detainment to surveillance (Robinson, 2007). The government prohibited recalcitrant civil activists from political activities and enforced various oppressive laws and regulations. In particular, the Emergency Measures of the 1970s were enforced arbitrarily to suppress civil society. Emergency Measures No.4 and No.9 were particularly notorious for quelling civil protests. Table 2 shows the number of political detainees imprisoned by oppressive laws under the Yushin dictatorship. The military government used both legal and illegal means to constrain civil society, and this constraint hindered potential channels to convey welfare demands in the policy process.
Number of political detainees under the Yushin government (1972–1979).
(Unit: person).
Includes 11 detained under the Special Measure for National Security.
Source: National Court Administration (each year), Yearbook of Court Statistics.
In the early 1980s, civil society was temporarily activated through a series of protests for political democracy, including the Gwangju democratization movement in 1980. However, the military Chun government inactivated civil society, including anti-government politicians and student activists, through diverse measures of constraints and inducements. While the control over civil society was slightly appeased when compared to the Yushin government in the 1970s, civil society groups continuously paid their primary attention to the enhancement of political democracy and human rights, excluding the promotion of economic distribution and social welfare from the agendas of protests. As a result, the slightly increased power of civil society in the 1980s did not lead to an increase of pressure for social welfare.
Interest groups mainly advocated for private interests, but they did not oppose government policies. Business groups like the Federation of Korean Industries followed government guidance, whereas professional interest groups, such as the Korean Medical Association and the Korean Bar Association, focused on advocating their professional interests. They were generally subservient to government as they were granted monopoly on interest representation under the state corporatist system (Y Kim et al., 2017). Civil society has been revitalized in earnest since the nationwide democratization protests in 1987. Since then, various civic groups have participated in the policy process with critical approaches.
Discussion and concluding remarks
This article reviewed the DWS’s contentions relating to the underdevelopment of state welfare in East Asian growth economies from a critical viewpoint. The core point of the DWS’s contention is that state welfare was underdeveloped in East Asian growth economies, and the main reason for this underdevelopment is that these countries had to preferentially channel scarce national resources into economic and industrial policies. The indices used to support this contention was the amount of welfare spending and its ratio to GDP.
However, this article refutes the DWS’s contention. The DWS’s contention regarding the underdevelopment of state welfare can be quite persuasive when state welfare is measured by welfare expenditure. State welfare was inferior in East Asian growth economies in terms of both the amount of welfare expenditure and its ratio to GDP or similar indices. Numerous examples, such as the enactment of the Industrial Accident Compensation Act in 1963 and the National Welfare Pension Act in 1973, approve the DWS’s contention that state welfare was underdeveloped due to the state’s prioritization of economic development (Yang, 2017).
However, it is risky to conclusively assert that the underdevelopment of state welfare was attributable solely to the preferential distribution of resources by relying on the simple evidence of low welfare expenditure. This is another version of economic determinism. There are many factors to be considered when evaluating and comparing the welfare level of different countries. We must analyze reality from a more comprehensive perspective that incorporates political and social explanations as well as economic explanation. We need to further elaborate the concept, scope and level of welfare underdevelopment and seek the causes from a more integrated point of view. In order to better grasp the reasons for welfare underdevelopment in East Asian growth economies, this article proposes the following.
First, we should approach welfare from the systems approach. It is possible to establish a comprehensive analytical framework within the broader environmental context of a particular country, which consists of politics, society and the economy. While input originally refers to demand and supply, we may replace them with welfare budget decision-making in the government and the amount allocated to welfare budget. Conversion is the process whereby central and local governments implement welfare budget. The government’s welfare delivery system can also be considered. Output is the result and impact of welfare policy and expenditure. This logic is based on the idea that increased welfare expenditure does not necessarily guarantee the high quality of welfare.
Second, we need to understand welfare underdevelopment from a more integrated and comprehensive perspective. Even though economic factors play a key role, political, social and cultural factors are also greatly influential. In addition, we can understand these factors through the supply and demand framework. Economic and financial capabilities and the degree of welfare expenditure may be considered as the supply side of welfare. Political factors, such as the degree of democracy, electoral competition and political events, and social factors, such as power of trade unions and strength of civil society, generally constitute the demand side of welfare. Cultural factors, such as respect for the elderly and community support, can also constrain the supply of welfare by limiting demand. The level of state welfare in a country is determined by the combination of demand and supply.
Third, the level of state welfare should be judged from a multi-dimensional perspective. Although welfare expenditure is one of objective indicators for international comparison, there are other important indices to judge the welfare level of individual countries. They include the degree of welfare institutionalization, the development of welfare personnel and organization, the coverage of welfare beneficiaries, and the level of welfare benefits. In Korea, welfare expenditure was insufficient under the growth economy, but institutionalization progressed considerably. 5 Welfare personnel and organizations also saw considerable expansion. 6 The coverage of welfare beneficiaries had also been extended incrementally since the early 1960s when major social insurance programs, such as medical insurance and industrial accident compensation insurance schemes, were introduced. 7 Meanwhile, the level of welfare benefits remained stagnant under the growth economy, as it was closely tied to welfare expenditure. Livelihood protection for the poor was insufficient in terms of the amount of benefits, 8 whilst the rate of out-of-pocket expenses was high in medical insurance. Pharmacies and herbal medicine were excluded from the Medical Insurance Scheme until the late 1980s. Although welfare service institutions were introduced for elderly and disabled people, and for children, their regulations were flimsy and lacked concreteness and compulsion.
Fourth, when adopting comparative methodology, we need to compare more relevantly. While the DWS compares the welfare level of the growth economy with that of developed countries, this comparison may be irrelevant owing to the significant gap between the two worlds in terms of economic development, democratization and the strength of civil society. Rather, it might be better to compare East Asian growth economies with the welfare level of developed countries during their periods of economic growth. A longitudinal comparison of welfare development within a particular country is another potential measure, since the amount GDP ratio of welfare expenditure varies over time. It is also necessary to consider differences in the structure of government budgets when measuring welfare level by welfare expenditure. It is irrelevant to compare the welfare expenditure of countries with different budgetary systems.
Fifth, we ought to examine welfare from the perspective of cultural relativism. Differently form Western experiences, which have achieved incremental development of state welfare (Kangas and Palme, 2005), East Asian countries placed a greater priority on economic growth than on redistribution and welfare, with the aim of catching up with Western economies. Western countries also adopted similar patterns of economic development in the early stage of industrialization. Pursuing economic growth and redistribution together was not easy in the beginning. Thus, we need to understand the state welfare system under the East Asian growth economy not from the modern Western standard but from the position of the then developing countries.
Lastly, we need to understand the context and structure of decision-making on welfare expenditure. Many factors influence parliamentary budget deliberations, including the budget department’s influence and the power relation between the executive and the legislative. The interplay of these factors impacts the amount of welfare expenditure. Thus, without considering the decision-making context, uniformly assessing the level of welfare expenditure may fall into the trap of excessive generalization. In Korea, parliamentary budget deliberation was not strict and effective under the strong presidential system. The rate of parliamentary budget revision never exceeded 3% until the 1980s (Chung, Park and Yu, 1993). The power of economy-related departments, particularly the Economic Planning Board, overwhelmed the welfare department under the growth economy, influencing the preferential allocation of funds to economic projects.
Footnotes
Funding
The author disclosed receipt of the following financial support for the research, authorship and/or publication of this article: This work was supported by the 2016 Yeungnam University Grant.
