Social protection in the Republic of Korea: Social insurance and moral hazard

Abstract

Abstract As reported in numerous studies, the system of social protection in the Republic of Korea long remained underdeveloped because of the priority given instead to economic growth. The past few years have seen major changes, however. The government decided to apply the theory of “productive welfare”, thereby committing itself to introducing a system of universal statutory social insurance which is intended to set the seal on a new social compact and which may, ultimately, impact on the model of socioeconomic development itself. This article outlines the recent changes in insurance against sickness, unemployment and old age and goes on to describe the moral hazard facing the new system of social insurance and the need for a form of joint management in order to minimize this hazard.