The National Assembly passed the government budget for this year on December 10 of last year. With an expenditure of 673.3 trillion won, the budget aims to ensure secure livelihoods and facilitate a leap into the future. The first of the four established targets, “better-tomorrow welfare for the socially weak”―the others being “spreading economic vitality,” “reform for the future,” and “making Korea a safe society and a global pivot in diplomacy”―focuses on enhancing welfare support for low-income citizens and socially disadvantaged groups. This initiative includes, among other things, childcare support, education support, and employment assistance for seniors and middle-aged individuals, all intended as policy responses to Korea’s aging population and low birthrate. The budget also prioritizes expanding support for essential health care and local health care, with a view to “making Korea a safe society.” In this month’s Health and Welfare Forum, we examine the budget expenditures allocated to such areas of social policy as “old age,” “children and families,” “youth,” and “employment.” A preamble article provides an account of the structural features of Korea’s social expenditures that distinguish them from those of other OECD countries. I hope that the articles herein will help readers grasp key social policy programs being implemented this year and gain a better understanding of the budget structure, in which Korea’s social expenditures are administered in lockstep with ongoing demographic changes, especially those driven by population aging. I also hope that the present issue of Health and Welfare Forum serves as an occasion for readers to consider what Korea’s social security system should be like in order to respond effectively not only to population aging and low-fertility trends, but also to challenges like climate change, digital transformation, and labor market changes.

In 2019, Korea spent a total of KRW 299.8 trillion on social security, according to the OECD social expenditure statistics in March 2025. As a share of GDP, this amounted to 15.6 percent, a sharp rise from just 2.9 percent in 1990. The growth of social expenditures, occurring as the population ages at a rapid pace, poses the challenge of both controlling total spending and revamping the composition of such expenditures. Examined in terms of funding sources, benefit types, and programs, Korea’s expenditures across several subcategories―including ‘old age,’ ‘incapacity-related,’ ‘health,’ ‘family,’ and ‘unemployment’―emerge as quite different in composition from those of other OECD countries with high public social spending-to-GDP ratios. Although Korea’s social expenditures may have been structured reflecting current public needs and policy demands, active policy measures are needed to better manage and allocate these expenditures as the country transitions to an advanced welfare state.

As of now in 2025, Korea is already a “super-aged” society, with those aged 65 and older making up 20.3 percent of the population. This demographic shift puts upward pressure on social security spending. A review of the 2025 budget reveals that ‘old-age’ expenditures, driven by rapid increases in spending on such mandatory schemes as public pensions and the basic pension, have grown to the point of accounting for over 50 percent of the central government’s total social expenditure, while the share of local-funded projects has been on the decrease. Efforts have been ongoing to provide services tailored to local conditions through less costly initiatives, such as community integrated care pilot projects and job programs for older adults, while still keeping the rate of premiums constant for the Long-Term Care Insurance. The significance of the 2025 old-age budget lies in providing, in a cost-controlled way, a basis for a comprehensive array of community-based policy measures―including a community- tailored elder care system―to meet the needs arising from an increasingly aging population as well as for improving the quality of services.

Korea’s 2025 budget allocated for ‘children and families’ expenditures, estimated according to OECD and EU standards, totals KRW 20.7 trillion―an increase of KRW 1.3 trillion from 2024. The fact that the children-and-families budget increased by a higher rate than did the budgets for ‘employment,’ ‘social welfare,’ and ‘health,’ can be taken for a positive development, not least in light of current fiscal austerity. However, a closer look at the seven subcategories of ‘children and family’ expenditures, as defined in the national budget and accounting system, reveals the government’s input to be limited. Notably, 78.5 percent of the total program-by-program cuts are concentrated in three areas: child benefits, parental allowance, and home childcare allowance. Meanwhile, of the total budget increase distributed across 33 programs, 62.3 percent goes to ‘maternal and child care support’ and 23.2 percent to ‘infant-and-toddler care support.’ However, since the budget increase for the latter program is attributed in a large measure to a recent increase in the national subsidy rate, the overall increase in the children- and-families budget is primarily driven by the expanded allocation to ‘maternal and child care support,’ funded by the Employment Insurance Fund. This may mean that the 2025 children-and-families budget increase, relying as it does to a significant extent on contributions paid by employees and employers, is more likely than not to benefit families left outside employment insurance coverage. Despite the unfavorable fiscal conditions, the government must take steps to expand support in a way that ensures broader coverage and tangible benefits.

This article reviews the progress made in the implementation of the Youth Policy Action Plan 2021~2024, and provides an overview of key changes in the youth policy programs included in the 2025 budget. The Youth Dream Housing Loan is a newly introduced initiative. Another new addition is the Three-Pronged Open Job Package. The National Scholarship program has extended to cover families belonging to the bottom 90 percent of the income distribution. The Youth Leap Account features increased financial support. These changes represent, notably, the expanded reach of youth policies, which extends from jobs and housing to education and asset-building. These policies are evolving in the direction of providing youth with more opportunities for education and empowering them to become economically independent. Such developments notwithstanding, the link between youth policy budgets and related programs remains indefinite. In the context of the budget classification system, youth policy initiatives are administered not even as “constituent projects,” but at the “sub-constituent” level, which adds to the difficulty of assessing their performance in connection with their designated budgets. For the preparation of the Second Youth Policy Masterplan (2026~2030) and its action plan, work needs to be put into making a more systematic way of aligning budgets with programs with a view to establishing an effective policy assessment system.

In this article, I examine the government’s employment support initiative for 2025, one of the top 20 national agenda projects that aims to help socially disadvantaged groups improve their economic situation by providing job opportunities. The project seeks to increase work incentives for participants in self-reliance programs and relax support eligibility criteria for employers that extend employment for older workers or hire seniors. The 3-in-one fill-unfilled-jobs package, introduced this year, is designed to expand work experience opportunities for young Koreans so as to enable them to enter the job market smoothly. These policy efforts are positive, to some extent, in terms of their effectiveness, as the subsidy jobs created can help disadvantaged individuals, who might otherwise struggle to secure decent employment in the private sector, find and retain work. However, despite the impact this subsidy jobs project may have in raising employment rates among disadvantaged groups, the quality of such jobs, typically low-paid, is a concern that can no longer be ignored. For example, it is unlikely that the youth employment support project, implemented with a focus on involving small- and middle-sized firms, to succeed unless accompanied by improvements in these firms, in their working conditions and in public perceptions of them. In addition, ensuring that socially disadvantaged individuals enter the labor market and retain work would require greater government support for the organizations and workforce that administer these support programs.

In this study, I estimated subjective poverty measures―i.e., minimum living costs―for households of different sizes and types, and, by comparing them with official poverty measures, drew policy implications. I estimated these thresholds using the Leyden methodology, applying regression analysis to subjective responses to survey questions about the least amount of income needed to “eke out a living,” “make ends meet,” or “maintain an acceptable level of living.” Several findings are of note. First, during the period 2003 to 2021, the subjective poverty measure that increased at the highest rate was the minimum ‘make-ends-meet’ living cost for one-person households. Second, the official poverty line, while still below even the ‘eke-out’ minimum, has improved in adequacy as its distance from the latter has narrowed by a great margin over the years. Third, the ratio of the subjective minimum ‘make-ends-meet’ cost to the social- assistance poverty line was considerably higher for one-person households than for larger households. Fourth, the subjective poverty thresholds were consistently higher across households headed by young or middle-aged persons than across those headed by older adults. The differences in these measures between the two groups narrowed over the years. It may be worth considering employing subjective poverty measures, useful as they are in judging the adequacy of benefit levels and of eligibility criteria, in policy assessment.