Are You Aware of the Durunuri Social Insurance Support Program?

[Dong-A Ilbo · July 18, 2013]

Yun Suk-myung, Director of the Pension Research Center at the Korea Institute for Health and Social Affairs (KIHASA)

[Dong-A Ilbo]

Yun Suk-myung, Director of the Pension Research Center at the Korea Institute for Health and Social Affairs (KIHASA)

Only those who have experienced it know the shock that sudden unemployment brings. It is also not easy for young people to empathize with the lives of older people who live in poverty because they were unable to properly prepare for old age. Given these circumstances, social insurance systems such as employment insurance and the National Pension were introduced to solve the problems of unexpected unemployment and poverty in old age.

However, there is a problem with the coverage of social insurance in Korea. Vulnerable groups, who have a high probability of unemployment and find it difficult to properly prepare for old age, are largely excluded from the social insurance system. To eliminate coverage gaps in social insurance for low-wage workers in small businesses, the 'Durunuri Social Insurance Support Program' is being implemented to support a portion of the contributions for employment insurance and the National Pension. As of the end of May, the number of beneficiaries of 'Durunuri Social Insurance' has reached 1.22 million people across 720,000 businesses, and it is assessed to be contributing to the strengthening of the social safety net.

It has been one year since the system was introduced on July 1. Now is the time for a comprehensive review based on the business performance of the past year. The problem raised even before the project began is the possibility of deadweight loss. This means there is a high possibility that it will become a contribution reduction system for contributors who already pay their contributions, rather than having the effect of bringing in vulnerable groups located in social insurance coverage gaps. It is pointed out that the policy effectiveness of the Durunuri program, which is operated with taxes, may decrease because the effect of reducing coverage gaps is limited.

Administrative power should be deployed to the problematic areas to supplement the operation of the system in a direction that maximizes effectiveness relative to the input cost. As a remedial measure, the method was changed starting this April to uniformly support 50% of contributions regardless of the income band. The target workers were also expanded to those with a monthly income of less than 1.3 million won.

Now is the time to simultaneously pursue remedial measures and efforts to maximize policy effectiveness while reflecting on the policy orientation pursued by the Durunuri program. By widely promoting the aspect that the Durunuri system effectively deals with social risks, we must accelerate the arrival of a world where everyone can enjoy social insurance throughout.

Source: Dong-A Ilbo (original article)