FINANCING SOCIAL SECURITY IN SOUTH KOREA AND SINGAPORE : A COMPARATIVE ANALYSIS

Abstract

Affluence and demographic trends in Singapore and South Korea means that the adoptions of social security arrangements will have important implications for society's welfare. This Academic Exercise attempts a comparative analysis of social security arrangements in the above two countries. The nature, structure and evolution of social security arrangements in Singapore is provided in Chapter 2, while Chapter 3 provides a corresponding discussion for South Korea. The discussion reveals that in both countries, the arrangements have not been static, but they have evolved in response to demographic, economic, political and other factors. The comparative analysis focuses on such areas as the philosophy of the government, health care financing and management of accumulated funds. While both countries belong to the newly industrialised, affluent group and share a confucian background, an interesting finding of the study is that their social security arrangements show considerable divergence. While South Korea has moved towards incorporating substantial social insurance elements in its social security arrangements, Singapore has eschewed these and continues with its provident fund strategy, a strategy used largely by the third world countries. The study also finds differences in health care financing (higher and increasing public sector role in South Korea as compared to Singapore), and management of funds (greater transparency in South Korea). An interesting question is whether each will be able to continue to follow the present arrangements. For South Korea, budgetary requirements brought about by rising costs and demographic trends may mean partial shifting of the responsibility of financing social security to the individuals. In Singapore, on the other hand, social inadequacy, coupled with political liberalization, may mean some shifting present philosophy. In both countries, but particularly in Singapore, there appears to be much greater need to increase indigenous research capability in this area. This in turn will partially depend on greater availability of relevant data.