Head, Asian Social and Health Outreach, OECD An overview of work within the OECD Social Policy Division, with a focus on work and family policy Hallym University 21 February, 2008, Chuncheon Willem Adema Head, Asian Social and Health Outreach, OECD (www.oecd.org/els/social/family)

Presentation outline The OECD Social Policy Division Pension policy Re-integration of people with disabilities Tax/benefit systems Income distribution and poverty Social indicators and social expenditure Families and Children Reconciling work and family life

Pensions at a Glance: Public Pension Reform is an Ongoing Process The nature of reform packages The pace of reform Changes in entitlements Maintain financial soundness, improve social sustainability and change labour market position of older workers

Pension reform packages Parametric Systemic Pension age Retirement Calculation Indexation Life M F incentives measure revaluing DC NDC Expectancy Austria  Finland France Germany Japan Korea New Zealand Sweden United Kingdom

Pensions at a Glance, Asia/Pacific The Joint OECD Korea Regional Centre for Health and Social Policy Pensions at a Glance Asia/Pacific: Comprehensive descriptive information on support system for the retired population. Comparison of pension systems, considering gross and net replacement rate and gross pension wealth (the pension promise accounting). Asian pension systems: coverage is the main area of concern

Gross pension benefit replacement rates against 50 % of average earnings

Sickness and Disability: promoting inclusion Reducing barriers to work Control public spending Fighting poverty among disabled Addressing mental health conditions Strengthening co-ordination across agencies Benefits and Wages; tax/benefit systems modelled to view financial incentives to work (e.g., replacement rates, effective tax rates). Comprehensive descriptive information on support system for the working age population; family benefits, rental support, unemployment, social assistance systems.

Disabled persons face a relatively high poverty risk Equivalised incomes of disabled relative to non-disabled people, 2004 10 20 30 40 50 60 70 80 90 100 Australia United Kingdom Poland Spain Luxembourg Switzerland Norway

Employment rates of disabled persons in countries with and without quota system 10 20 30 40 50 60 Canada Sweden Switzerland Luxembourg (2-5%) United States Denmark France (6%) Mexico Germany (5%) Korea (2%) United Kingdom Norway Portugal (2% p) Austria (4%) Netherlands Australia Spain (2%) Belgium (2-5% p) Italy (7%) Poland (6%) country with quota country without quota

Rights and responsibilities: tax benefit systems Balancing adequacy with financing incentives to work: - benefit payments - relatively low wages - high tax rates levels - high childcare fees - tax/benefit calculator: www.oecd.org/els/els/social/workincentives Benefits and Wages; tax/benefit systems modelled to view financial incentives to work (e.g., replacement rates, effective tax rates). Comprehensive descriptive information on support system for the working age population; family benefits, rental support, unemployment, social assistance systems.

An indication of generosity of income support payments to unemployed persons, 2005. After tax and including unemployment benefits, social assistance, family and housing benefits. Unweighted averages over 60 months of unemployment, for earnings levels of 67% and 100% of average earnings and four family types (single persons, lone parents, one-earner couples with and without children).

A new report on redistribution of resources, including Korea, will be released in 2008: preliminary conclusions on recent trends Countries with wider income distributions generally also have higher poverty In most OECD countries, inequality and poverty have risen slightly over the last decades Rise in the number of single adult households Work is an effective anti-poverty device The number of persistently poor people is relatively small Relative poverty concept: 50% of equivalised median income Trend data since the 1980s every 5 to 10 years, for about 28 countries

Income redistribution and poverty: Children often face an elevated poverty risk 0% 5% 10% 15% 20% 25% 30% AUS CAN DEN FRA GER JPN MEX NLD SPA SWE UK US OECD child poverty rate overall poverty rate Mid-1990s 2000 Relative poverty concept: 50% of equivalised median income Trend data since the 1980s every 5 to 10 years, for about 28 countries New data, including for Korea, will be released in 2008 in a comprehensive report on redistribution of resources across OECD countries Poverty thresholds at 50% of median income for the entire population

OECD Social Indicators Policy effectiveness is assessed using three types of indicators: Context indicators -- what constraints are there? Social Status indicators -- how well/badly are countries doing? Societal response indicators -- what policies are being used? SAG Asia/Pacific is being developed

The OECD social indicator framework Context indicators: national income, population ageing, fertility rates, marriage and divorce, sole parent families, migrants and refugees The context within four broad social policy objectives are pursued (in brackets indicator examples): Promote Self-Sufficiency: employment, unemployment, joblessness, and educational attainment.

The OECD Social Indicator Framework (contd.) Equity: relative poverty, income inequality, low paid employment, gender pay gaps, child poverty, and poverty persistence. Health: life expectancy, infant mortality, low-birth weight, and long-term care recipients. Social Cohesion: suicides, substance abuse, crime, prisoners, strikes, and voter participation.

The OECD Social Expenditure database Detailed programme data for 30 countries since 1980 Spending data grouped by social policy area and the nature (public/private) of support The effect of the tax system: Taxation of benefit income and the provision of fiscal support

Most spending is on pensions and health care Public social expenditure, per cent of GDP, 2003

Gross and Net public social spending, in 2003 Gross public spending overestimates public social effort in many countries, but not in the US Gross and Net public social spending, in 2003 5 10 15 20 25 30 35 40 SWE DNK FRA DEU NOR GBR NLD USA Average % GDP at factor costs Gross Net

Social spending after tax, in %GDPfc, in 2003 ‘After tax’, Public AND Private levels of social spending are similar in many OECD countries. Social spending after tax, in %GDPfc, in 2003 5 10 15 20 25 30 35 FRA DEU SWE GBR USA NLD DNK NOR Average % GDP at factor costs Private Public

OECD work on family policy - Babies and Bosses - Fertility studies - Employment Outlook - Starting Strong - Work on child well-being - The OECD Family database

The OECD Family database Structure of families Labour market position of families Public policies towards families Child outcomes www.oecd.org/els/social/family

Child Well-being project Under three’s policy package Child well-being and sole parenthood Child well-becoming (e.g. parental employment, intergeneration equality), Distribution of public spending, over time and across family types Child outcomes and child policy

The Korean public support profile over the early lifecourse reflects education spending patterns.

Family policy challenges in Korea Rapid ageing and low fertility How to increase effectiveness of public policy support? Address “family-unfriendly” workplace practices

Babies and Bosses reviews of policies towards the reconciliation of work and family life. Reviews of 13 OECD countries feeding into the 2007 synthesis issue: - Key outcomes - tax/benefit systems - childcare - Workplace practices

In international comparison, Korea scores badly in terms of key Work and Family outcomes

Korea will age more rapidly than most other OECD countries… Population aged 65 and over, relative to the population aged 20-64, 2000 and 2050

1980 Female employment rates, and total fertility rates 2005 ..and Korea ranks among the countries with low female employment rates and low fertility rates. 1980 Female employment rates, and total fertility rates 2005 NB Different scales on the horizontal axis of the panels; female employment has increased everywhere

Fertility concerns may drive the family policy debate in Korea, but in other OECD countries different policy objectives play a key role Increasing female employment to sustain economic growth and pension systems Tackling child poverty Promoting child development Gender equity

Public spending on family benefits, per cent of GDP, 2003 Policy responses also differ across countries: public family support is limited in Korea. Public spending on family benefits, per cent of GDP, 2003 Public support included here only concerns items that are exclusively for families (e.g. child payments and allowances, parental leave benefits and childcare support). Spending recorded in other social policy areas as health and housing support also assist families, but not exclusively, and is not included here.

…in particular, Nordic countries provide a continuum of care and employment supports Public spending covers: Extensive health, housing and education support Paid parental leave for around one year or more Public childcare and early education Out-of-School-Hours care The policy model is expensive; in Denmark and Sweden tax-to-GDP ratio is 50%. Therefore, many countries income-test support or leave ‘gaps’ in public family support

For example, Iceland frontloads investment in families with children

In terms of childcare participation, Korea is not doing all that badly…

… and it seems that workplace cultures are the main barrier to achieving a better work/family balance in Korea Women are often expected to leave work on marriage/childbirth Regular employment, pursuing a career and motherhood seem difficult to combine workplace cultures don’t support work/family balance Female labour market outcomes are unfavourable

Working hours in Korea leave little time for family commitments… Share of workers by distribution of usual working hours, by gender, 2005

Female labour market outcomes are unfavourable: for example, Korea has the largest gender pay gap in the OECD The proportion of women with supervisory responsibilities is 8%, against 20-30% in many OECD countries. One third of female workers (and 40 of female workers of childbearing age) are in temporary employment, compared to 18% on average across the OECD

The share of women working in temporary employment is very high

…and while educational attainment in Korea has improved markedly for both sexes…

…employment among high-skilled women is relatively low in Korea.

Korea needs to better use its ‘female capital’ to avoid shrinking of the labour force Total labour force from 1980 to 2000, and projections from 2005 to 2030, in thousands ‘Constant rates’: assumes constant labour force participation rates for men and women from 2000 to 2030; ’Gender equity in participation rates’: assumes that female participation rates reach current male participation rates in each country by 2030.

Korean workplaces practices need to change More opportunities for women/mothers to stay/return to regular employment. Increase the role of performance-related pay Maintain employer/employee relationship during parental leave There is not ‘one-size-fits all solution’, but ‘right to request workplace flexibility’ may help employers and employees find solutions that suit them both.

More information http://www.oecd.org/els/social OECD (2007), Pensions at Glance, Public policies across OECD countries OECD (2007), Sickness, Disability and Work: Breaking the Barriers, Vol. 2, Australia, Luxembourg, Spain and the United Kingdom. OECD (2007), Benefits and Wages, 2007 OECD (2007), Society at a Glance, OECD Social Indicators OECD (2007), The OECD Social Expenditure database, Interpretative guide of SOCX OECD (2007), Facing the Future, Korea’s health, Family and Pension Policy Challenges. OECD (2007), Babies and Bosses, Reconciling Work and Family Life: A Synthesis of findings for OECD countries.