hankyoreh

Last year, the ratio of South Korea’s GDP to its public expenditures on social welfare was the lowest among members of the OECD, or Organization for Economic Cooperation and Development, recently published figures show. In 2013, South Korea ranked 31st out of all 32 OECD countries.

In addition, as of 2013 - the most recent year for which figures are available - South Korea was 28th out of 30 countries in terms of its total tax rate (which includes annual taxes as well as contributions to social insurance, such as pension and health care.

This confirms once again that South Korea is a prototypical “low-tax, low-welfare” country, meaning that the contributions made, and the benefits received, by the South Korean public are small.

According to figures that the OECD released on Feb. 5 comparing the social expenditures of member states to their gross domestic product (GDP) in 2014, the ratio in South Korea was 10.4%, placing it at the very bottom of the 28 countries for which data was available.

The ratio was not even half of the OECD average of 21.6%, placing it at the level of Europe in the 1960s. There was a 6% point between South Korea and Estonia (16.3%), which ranked 27th.

In 2013, figures were available for 32 countries, but four countries including Chile (32nd in 2013) were omitted from the rankings this year, sending South Korea to the bottom.

It should be noted, however, that South Korea’s ratio of welfare expenditures to GDP has been steadily increasing, from 4.8% in 2000, 9% in 2010, to 10.2% in 2013.

The public social welfare expenditure index represents a government’s major budgetary allocations for welfare and social insurance, which is to say its total expenditures on social welfare, minus the private sector.

The OECD country with the highest welfare expenditure ratio was France (31.9%), followed by Finland (31%).

One explanation is that South Korea’s welfare expenditure rate is low because of the comparatively low expenditures made by the public pension fund.

But even in an “international comparison” carried out in 2014 by the National Assembly Budget Office (NABO), which equalized socioeconomic conditions in OECD member states, Korea was far behind, only scoring 65.5 points on a scale in which 100 was the OECD average.

By Park Su-ji, staff reporter

Please direct questions or comments to [english@hani.co.kr]