ED Reforming reforms

Reform is difficult because people instinctively dislike change. This is especially true if the change leads to conflicts between different classes and generations. A typical case is pension reform.

Korea’s pension system is inefficient and unpopular. The accumulated national pension fund has exceeded 1,000 trillion won ($740 billion), one of the three largest amounts worldwide. However, a foreign report ranked it at 42nd place among 47 countries. In the adequacy subindex ― which rates benefits, government support and asset growth ― Korea was dead last.

Little wonder a survey showed that nearly 80 percent of Koreans feel the need to reform it. Currently, they contribute less and receive less. The largest share (about 40 percent) of respondents said they wanted to pay more and get more. So, the reformers’ job is to determine concrete levels.

However, the government’s reform plan, which passed a Cabinet meeting on Monday, only reaffirmed the principles without presenting any concrete figures.

“There are criticisms that the plan has no substance or numbers and that the government is playing it safe ahead of the elections,” President Yoon Suk Yeol said. “However, pension reform is not an issue that can be wrapped up by presenting conclusive numbers without a basis to back them up or a social consensus.”

Is the chief executive confusing the roles of the government and the people or avoiding the moment with sophistry?

People have heard terms like social consensus thousands of times. They need a government that offers specific figures and objective grounds and persuades the relatively disadvantaged group for the maximum amount of good. When the previous government offered a four-way multiple-choice plan, the current governing party criticized it as evasive and irresponsible. Now, it is presenting a 24-way plan. Yoon said his government leaves vast amounts of data for more discussion. People regard it as vast confusion.

This is no time for political ping-pong or hot potato. As the former Moon Jae-in government delayed pension reform, the fund will dry up in 2055, two years earlier than originally estimated. Given the nation’s extremely low birthrate, the dreadful moment will come even earlier if Korea wastes another five years dragging its feet. Around 2060, Koreans will have to pay at least one-third of their incomes so as to receive a pension, which will, of course, come from newly imposed premiums, not accrued funds. This assumes that Korea can even lift its fertility rate and maintain it above 1.

According to experts, however, the answers have long been there. They say that what Korea should do is clear, based on studies and opinion polls.

More specifically, the government must raise the premium rate from the current 9 percent to at least 15 percent. It should do so in phases but specify the timing instead of saying “gradually.” The pensionable age should come at least two years later, and the income replacement rate should be kept at the current 40 percent level. The returns concerning the fund's management should, and can, be improved by 1 percentage point or even more. The government must also be ready to chip in if needed.

What matters is not the lack of ideas but the political will – and courage – to push them through. One can’t help but question President Yoon’s political instincts, as shown in his one-sided shifts in social and foreign policies. Had he shown half the courage that he did when relocating the presidential office or forgiving Japan’s lack of repentance, his pension reform plan might have been far more specific, and his other reform efforts might have progressed more smoothly.

Koreans supported Yoon’s vow to reform three important sectors — labor, pension and education ― thinking that these were unpopular but essential tasks. None of these moved an inch forward, with some going backward.

That was due to the president’s waste of political capital and voters’ goodwill on unnecessary things in his first several months.

Reforms are essential for Korea’s progress. Before it gets too late, the chief executive must renew his approach with a humble stance and open mind. At stake is not a government’s destiny but the entire nation’s future.