August 25, 2011 11:28 am

S Korea referendum opens door to welfare state

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South Korea’s leftwing opposition is celebrating the outcome of an unprecedented referendum on whether the state should pay for school lunches, which they say paves the way for Korea to become a welfare state.

Wednesday’s referendum was seen as a test of public sentiment towards state spending in Asia’s fourth-biggest economy, which is expected to be a key battleground in next year’s presidential elections.

Oh Se-hoon, conservative mayor of Seoul, called the referendum to block the leftwing city council from implementing measures to feed all of Seoul’s 850,000 junior and middle school pupils at the municipality’s expense. Mr Oh proposed that only children from poorer families should receive free meals.

The leftwing Democratic party urged Seoul’s 8.4m voters to boycott the mayor’s poll, which would fail automatically if turnout were less than 33.3 per cent. Turnout was ultimately only 25.7 per cent and the citizens of Seoul are waiting to see whether Mr Oh will follow through on his pledge to resign after failing to stop free lunches for all children.

“Seoul’s citizens have shown our society the path to a welfare state,” said Sohn Hak-kyu, head of the DP and a presidential contender, interpreting the low turnout for the poll as a deliberate statement of voter sentiment.

While the DP sees the referendum as a boost before the election, Mr Sohn is not faring well in polls for the presidential vote. He trails far behind Park Geun-hye from the ruling conservative Grand National party, daughter of the country’s former dictator, whose allies cast her as a fiscal conservative.

While turnout was low, the result is an ideological blow for the GNP, which has been arguing that South Korea should guard against heavy welfare spending.

Lee Myung-bak, president, has been a vocal campaigner, warning before the poll that excessive social spending in a rocky global economy “would be tantamount to voyaging on a vast sea in a leaking boat”.

“We can learn a great lesson from southern European countries, which are on the brink of bankruptcy due to indiscriminate expansion of welfare benefits,” he said.

While the GNP has stressed the fiscal dangers of welfare, the Democratic party has struck a chord by accusing conservatives of prioritising big business rather than helping cash-strapped ordinary households which are hobbled by high debt, expensive education and inflation.

Historically, South Korea’s welfare has been weak as it has focused more on supporting frail small businesses rather than constructing a European-style safety net.

Many economists note a robust safety net for the unemployed would have to be a vital precursor to restructuring the nation’s highly inefficient small and medium-sized enterprises. The sector accounts for 90 per cent of jobs but many of the businesses are currently supported by state subsidies and cheap loans.

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