S Korea’s elderly left behind by speed of change

February 7, 2014 6:32 am

S Korea’s elderly left behind by speed of change

By Simon Mundy in Guryong, South Korea

As she shuffles down the snow-dusted lanes beside her home, 81-year-old Hwang Sam-bun can easily gaze over at the gleaming Tower Palace, an opulent apartment block in Seoul’s upmarket Gangnam district.

While her village of Guryong lies close to South Korea’s most glamorous neighbourhood, it is firmly at the other end of the country’s economic spectrum. A pack of stray dogs scampers between low, ramshackle slum dwellings that conjure images of the years before South Korea began its rapid industrialisation half a century ago, as one of the world’s poorest nations.

Many members of the generation who kick-started that transformation have enjoyed only limited rewards – something reflected in Guryong, where the population of 2,000 is disproportionately elderly, a typical characteristic of South Korea’s poorest settlements.

Ms Hwang and her disabled son receive just Won124,000 ($116) per month in welfare payments – a sum barely enough to cover their energy costs, meaning they have to turn to charitable organisations for food. “It’s tough here with the damp, the cockroaches and insects,” she says. “I’m just waiting to die, really.”

Decades of rapid economic growth have left most of South Korea’s citizens enjoying developed-worldlifestyles: the country’s gross domestic product was $31,950 per person in purchasing power parity terms in 2012, according to the International Monetary Fund, higher than Spain and New Zealand.

Yet the statistics on the country’s elderly population make for less comfortable reading. Forty-nine per cent of elderly people lived in poverty in 2012, compared with a national average of 14 per cent. They receive only limited support from a welfare system that is the second-worst funded in the OECD, relative to the size of the economy. Most shockingly, the suicide rate among old South Koreans is by far the highest in the world: at about 80 per 100,000 people in 2011, it has quintupled over the past two decades.

“People in their 70s today were born into an agricultural society and had no concept of preparing for their old age,” says Kim Yeon-myung, a social welfare professor at Chung-Ang university. “They just thought their children would support them.”

Societal changes have left those expectations dashed in a growing number of cases. Mass migration to the cities has left many old people stranded in the countryside, while most South Koreans now live in apartments, typically with little space for grandparents to move in.

Real wage growth has not kept pace with the broader economy, meaning that many households struggle to meet their housing and general living expenses. As South Korea has changed into a more competitive, materialistic society, Confucian notions of filial duty have been abandoned: only 36 per cent of respondents to a government poll in 2010 saw it as their duty to care for their parents, down from 90 per cent in 1998.

This contrasts with South Korean parents’ willingness to make financial sacrifices for their own children’s education: spending on private tuition has ballooned since it was legalised in 1991, often leaving little to spare for aged relatives.

The question of how to improve care for the elderly is particularly pressing in what will soon become one of the world’s fastest-ageing societies, thanks to a birth rate of just 1.2 children per woman.

President Park Geun-hye came to power last February promising to increase social spending by Won125tn over her five-year term, with increased public pensions at the heart of the platform alongside expanded treatment for selected serious diseases.

But Ms Park’s plans drew a sceptical response from economists who noted her promise to fund these plans without increases in tax rates or public – instead, she said, it would be paid for by cracking down on the underground economy and undefined “wasteful” expenditure.

In August, media criticism prompted the hasty withdrawal of a tax plan that would have raised revenues by cutting tax allowances. The following month Ms Parkannounced cutbacks

to her welfare platform, calling them “inevitable” amid a global economic slump, although South Korean GDP growth accelerated last year.

Instead of a universal pension of Won200,000, payments will now be means tested, with less generous awards to those who have amassed significant savings in the National Pension Service. That has sparked unhappiness at the NPS, which has been trying to encourage workers to save more than the statutory minimum, in preparation for the country’s demographic crunch.

“South Korea is trying to make a balance,” says Kwon Young-sun, an economist at Nomura. “I don’t expect a comprehensive or high standard of social welfare for old people – that’s negative for long-term fiscal sustainability.”

The cutbacks will not affect the poorest among the elderly such as Ms Hwang, who will still see her basic pension more than double from the current level of Won94,000.

“The president has lots of other things she needs to take care of as well as old people,” she says, after describing her undying admiration for Ms Park’s father Park Chung-hee, the military dictator whose economic reforms built the foundations for growth. “I don’t feel angry towards anyone.”