The Peninsula

Municipal Attempts to Tackle National Issues

What Happened:

• Seoul municipal government is launching a pilot welfare project to provide monthly subsidies to low-income earners.
• The project is set to assist 800 households in the bottom 33% income bracket over the next three years.
• Last year, South Korea ranked fourth highest in relative poverty among the 38 Organization of Economic Cooperation and Development (OECD) countries.

Implication: Local governments are taking the lead in addressing broader structural problems in the country. Seoul’s recent plans to address the income gap in the city come in concert with other municipal and provincial governments expanding their policy toolkits to address challenges at a local level. Although Seoul does have a history of providing assistance to low-income communities, including a housing voucher program and pet medical treatment subsidy, recent efforts such as the monthly subside and online private education explicitly seek to fill gaps left by central government shortcomings. However, Seoul municipal government’s scope and reach – along with other local governments’ – are insufficient to address fundamental problems driving these inequalities.

Context: In addition to the high relative poverty rate, South Korea had the second-highest income gap in the OECD in 2020. In response, the national government advanced programs to mitigate economic difficulties, including a monthly rent subsidy for young people in lower-income brackets. However, the government has not come up with solutions to underlying challenges that exacerbate inequality such as the persistent gender income gap and the concentration of wealth in Seoul.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of Kayla Harris, David Lee, Sarah Marshall, and Mai Anna Pressley. Picture from the flickr account of A. Wee