[Editorial] Expanding safety net

The government has come up with a plan to reform the National Basic Living Security System, a social safety net designed to provide income security for people in poverty.

The proposal is aimed at increasing the number of beneficiaries by easing the eligibility criteria and changing the way benefits are provided. According to a government estimate, the proposed changes will boost the total number of recipients from 1.4 million to 2.2 million.

The safety net needs to be expanded in light of the worsening poverty problem. Currently, more than 8 percent of the nation’s population lives below the absolute poverty line, while more than 14 percent are in relative poverty.

The program’s eligibility criteria need to be relaxed as they limit its coverage. To be eligible, a person should earn less than the minimum cost of living, which is set at about 1.55 million won a month for a four-member family.

Furthermore, a beneficiary should not have any person liable to support them, or if there is any, the person should earn less than the government-set level of income to be regarded as incapable of supporting them.

The government plans to ease the requirements by raising the income level that triggers the imposition of parent support liability on a son or a daughter.

It also intends to revamp the current method of benefit disbursement. Under the present system, benefits are provided in an all-or-nothing fashion. If a man passes the means test, he receives the entire assistance package, which consists of seven allowances. But if he fails the test, he receives nothing, even though he is in abject poverty.

The reform plan proposes to disburse these allowances individually, taking into consideration the needs of each beneficiary. At the same time, it proposes to offer certain assistances, for instance education allowances, to households that have thus far been denied any benefit.

This approach is more reasonable. It will have the effect of expanding the coverage of the public assistance program to include what are called “next needy classes,” people who are in poverty but are excluded from the NBLSS just because they earn a little bit more than the beneficiaries of the program.

But one problem with this approach is that under it, some beneficiaries could suffer a drop in the amount of income support. For instance, a recipient who owns a home could receive a smaller allowance if the government stops providing housing benefit.

The government will have to find ways to ensure that present beneficiaries do not suffer a sharp cut in their allowances.

The government’s reform plan is well-conceived. Yet one big problem is that it lacks a specific funding scheme. The government said it would finalize the plan by October for implementation from November 2014. Before then, it needs to present a detailed financing plan.