The Impact of Neo-liberalism on South Korea’s Public
Pension: A Political Economy of Pension Reform
Chang Lyul Jung and Alan Walker
Abstract
This article examines the recent Korean pension reforms from a political economy perspective. It
argues that these reforms are of particular interest because, unlike major pay-as-you-go pension
schemes in Europe, the Korean pension scheme is a funded one and, therefore, is subject to market
exposure. Also in contrast to the problems that public pension reforms have encountered in European
and other OECD countries, especially ‘blame avoidance’, the more radical Korean reforms were
implemented without significant challenge or resistance. First of all, the National Pension Scheme
is described prior to the Asian economic crisis. Then the impact of this crisis on the Korean
welfare state and, especially, its pension system are analysed. The main part of the article consists
of a political economy of the pension reform process, in which the key roles of the international
governmental organizations and the domestic neo-liberal policy elite are pinpointed. This neo-liberal
ideology was critical in developing and sustaining an influential discourse on the ‘crisis’ in Korea’s
national pension fund. The article concludes by arguing, against the neo-liberal tide, for the
inclusion of a pay-as-you-go element in the national pension in order to tackle escalating poverty in
old age.
Keywords
Pension reform; South Korea; Neo-liberal policy; Pension fund; Political economy
Introduction
Since the early s the global pensions debate has been dominated by
neo-liberalism (Walker b; Walker and Deacon ; Ervik ). At the
head of this neo-liberal policy tide has been the international government
institutions (IGOs), especially the World Bank, which shaped pension reforms
in no less than countries between and (Deacon ). In fact, the
scale and global reach of its influence in this key policy field is stunning:
although their path dependencies and precise reform blueprints differ,
Address for correspondence: Alan Walker, Department of Sociological Studies, Elmfield, Northum-
berland Road, University of Sheffield, Sheffield, S TN. Email: A.C.Walker@sheffield.ac.uk
S P &A 0144–5596
DOI: 10.1111/j.1467-9515.2009.00672.x
V. 43, N. 5, O 2009, . 425–444
© The Author(s)
Journal Compilation © Blackwell Publishing Ltd, Garsington Road, Oxford OXDQ , UK and
Main Street, Malden, MA , USA