A fragile social contract: The politics of an unpopular welfare reform in South Korea

In recent decades, welfare states have gone through major reforms to address challenges of population ageing and new social risks. Now, with emerging political polarisation, democracies also face realignment in the support basis of the welfare state. Public opinion research has therefore focused on public attitudes and acceptability towards possible welfare reforms, often through survey experiments.
While the majority of studies are based on mature European welfare states, South Korea presents a unique context for case study. Due to its short history of welfare state development, the pension system is immature, keeping old-age poverty at the highest level in the OECD, while already facing severe demographic pressures. Therefore, reform strategies must address the dual challenge of fiscal sustainability and improving old-age income security.
To explore politically feasible reform strategies, we designed a series of survey experiments on the acceptability of an ‘unpopular’ but necessary pension reform in Korea – raising the contribution rate for the National Pension Service (NPS), currently much lower than most mature systems in aged societies. The first survey includes is a multifactorial experiment composed of four treatments – (a) underscoring fiscal imbalance due to rapid demographic ageing; (b) on top of (a), offering a more generous, tax-financed basic pension to tackle poverty; (c) on top of (a), offering a slower rise in contribution rates for younger people for intergenerational fairness; and (d) a combination of all three treatments in (a), (b) and (c).
The second survey is a conjoint experiment that randomly suggests pension policy parameters in five dimensions: (1) the degree of increases in the contribution rate in the earnings-related NPS; (2) whether to differentiate the pace of contribution rate rises between generations; (3) raising or cutting the income replacement rate; (4) the generosity of tax-financed basic pensions; and (5) whether to raise the state pension age.
Results from the first experiment show that there is severe heterogeneity in the treatment effect by gender and generation, and thus the average effect is not informative. Second, providing transparent information on the fiscal challenges undermines policy support, especially among younger people. Third, a compensation strategy offering stronger non-contributory benefits does not raise but rather weakens support, and this is mainly driven by anti-welfare attitudes among young males. The second survey is currently under analysis. Our findings reveal the fragility of the support basis for an immature welfare state, which can become a source of generational conflict.