[Public Opinion Briefing Vol. 59-2] Middle-Class Policies: Strengthening the Middle Class by Enhancing Social Resilience

[Public Opinion Briefing Vol. 59] Perception of Social Strata Survey

1. Perception and Reality of the Middle Class: Severe '3 Discontents: Distrust, Dissatisfaction, and Anxiety'

2. Middle-Class Policies: Strengthening the Middle Class by Enhancing Social Resilience

[Let's Enhance Social Resilience 1: Income and Consumption Burden Reduction]

Urgent need for income/consumption policies that link national economic growth to individual growth

Introduction of long-term savings products for the middle class is necessary

The middle class in Korea has a lower proportion of subjective middle-class individuals compared to objective middle-class individuals, and recently, the proportion of core middle-class individuals within the middle class has been decreasing, while the proportion of the marginal middle class has been increasing. The primary reasons for this phenomenon are believed to be the burden of necessary consumption expenditures and uncertainty about the future.

First, while absolute income level is an important determinant of the middle class, consumption factors such as education and housing expenses are considered even more crucial. In this survey, the proportion of respondents who indicated education expenses as the biggest burden among consumption items was 11.8% for low-income households with a monthly household income below 1.67 million won. This figure rose to 37.1% for marginal middle-class households with a monthly income of 1.67-3.33 million won. For stable core middle-class households, it was as high as 56.0%. Notably, among households with children attending elementary, middle, or high school who perceive themselves as middle class, the proportion of education expenses in monthly expenditures exceeded 30% for 53.5% of them. For those with expenditures between 20-30%, the rate was 22.4%. For Korean households, education expenses are not a variable choice but rather a necessary expenditure. To reduce education expenses, in addition to revitalizing public education, measures such as implementing a voucher system for private education expenses targeting low-income households and providing tax benefits for private education expenses targeting middle-class households could be considered.

Uncertainty about the future can be divided into anxiety about short-term events such as job loss, accidents, or business closures, and anxiety about the overall future economic situation in the long term. While 62.1% of respondents expect the national economic situation in 10 years to be positive, only 51.6% expect their household economic situation to be positive. Even if the economy improves in the short term, the recovery of the middle class will not be easy unless long-term anxiety is reduced.

To alleviate short-term anxiety, measures such as strengthening temporary income support systems for the unemployed, promoting and revitalizing industry-specific mutual aid societies for self-employed individuals and increasing government support, and improving the health insurance system to reduce the burden on severely ill patients are necessary. People must be assured that there is a robust social safety net to protect them from sudden unemployment or accidents.

To alleviate long-term anxiety, it is crucial to instill confidence in the public that the Korean economy can achieve sustained and stable growth. To ensure that economic growth translates into individual prosperity, the introduction of long-term savings products for the middle class, coupled with significant tax and interest rate benefits, can be considered. Furthermore, systematic measures must be urgently developed to reduce the risks faced by the elderly in the impending aging society, as their children cannot be expected to provide for their old age.

[Figure 1] Proportion (%) of households by social stratum citing education expenses as the biggest burden on household consumption expenditures

[Figure 2] Outlook for the Korean economy in 10 years

[Figure 3] Outlook for the household economy in 10 years

Kang Seok-hoon (Department of Economics, Sungshin Women's University)

[Let's Enhance Social Resilience 2: Labor and Employment Policy]

Job creation is a priority over protection!

The voices of those affected by the non-regular employment issue must be heard

Middle-class individuals with jobs are mainly employed in sales, service, and office work, while low-income households are most concentrated in sales positions. In terms of employment status, the proportion of wage earners is significantly lower among low-income households, with a large proportion being self-employed without employees. Consequently, the opportunity for self-development is virtually nonexistent. Two-thirds of workers do not engage in self-development efforts, and this figure reaches 88.3% for the low-income poverty class.

What is the most important policy the government should implement to strengthen the middle class? The answer is clear. Both experts and the general public respond that 'job creation' is more important than 'direct income support for vulnerable groups' or 'tax support.' Interestingly, the proportion of respondents who consider job creation most important is higher among the general public than among experts.

A similar response is observed regarding the issue of non-regular employment. More than half of the general public (56.4%) agreed with the statement that the expansion of non-regular employment is inevitable for corporate competitiveness and the creation of more jobs. This agreement rate is higher than that of experts. Furthermore, the proportion of agreement with this statement increases as income level decreases. The fact that these responses are higher among individuals with lower education levels (high school or below), women, and low-income groups, where non-regular workers are highly concentrated, is significant.

This is because the voices from the field are not being properly reflected in policy. The recent non-regular employment issue focuses on the rate of conversion to regular employment due to the implementation of the Non-Regular Employment Act. However, in the labor market, tens of thousands of workers have lost their jobs as their employment contracts expired due to the implementation of this law. While everyone is engaged in a meaningless numbers game, measures for these individuals are not receiving attention. Policymakers must now listen to the voices of those directly affected by the non-regular employment issue. Most of them want to find employment, even as non-regular workers, rather than focusing on conversion to regular status through legal protection.

[Figure 1] Proportion (%) of each social stratum responding 'do not engage' in self-development

[Figure 2] Priority middle-class policy the government should focus on (Average % of 1st + 2nd priority)

[Figure 3] Economic Perception: Proportion of 'Strongly Agree + Slightly Agree' (%)

Choi Kang-sik (Department of Economics, Yonsei University)

[Let's Enhance Social Resilience 3: Welfare Policy]

Middle Class is a Blind Spot in Korean Social Security

Middle-Class Policies are Low Birthrate and Aging Society Policies

In this survey, the Korean public held divergent views, with some believing that the upper class benefits most from current social security systems, while others believed the poor benefit most. However, the perception that stable middle-class or marginal middle-class individuals benefit was not significant. In particular, respondents belonging to the middle class most frequently indicated that the upper class receives the greatest benefits. Furthermore, in terms of social welfare, the biggest concerns for the Korean middle class were the burden of child-rearing costs and anxiety about old age, which indicates that social welfare systems are not adequately responding to these social risks.

Therefore, to strengthen the middle class, social policy responses to these risks are required. Moreover, this survey confirmed that the burden of child-rearing and education expenses is a cause of Korea's severe low birthrate. Therefore, along with educational policy measures, the expansion of public childcare facilities to reduce the burden of child-rearing is urgently needed. The reduction in the working-age population due to the low birthrate poses a serious threat to the Korean economy, making social policy responses to this issue highly significant economically.

Meanwhile, the survey indicates that the proportion of middle-class individuals aged 60 and above is 13.2%, the lowest among age groups. This is because Korea's welfare system does not significantly contribute to maintaining a stable economic life in old age. Approximately 19% of respondents have made no preparations for old age, and even among those who have, most are considerably worried about their later years. Only 35.9% of respondents stated they are currently enrolled in the National Pension, and considering that about one-third of them are enrolled but not paying premiums, the number of individuals who will fall from the middle class to poverty in old age is bound to increase.

To prevent this, policies to strengthen the National Pension, along with expanding private and occupational pensions, are necessary. Due to the anxiety surrounding old age, the proportion of people who wish to continue working in their old age is also quite high. The need for policies to prevent old-age poverty and protect the middle class by strengthening lifelong education systems to effectively enhance their productivity is being raised. Meanwhile, in cases requiring long-term care in old age, most respondents indicated that their spouse would provide care, and a very high proportion stated they would use nursing homes rather than family for long-term care. This is particularly pronounced among those belonging to the middle class, confirming the urgent need to expand nursing home facilities due to changes in family structures and the aging population.

[Figure 1] Who are the biggest beneficiaries of Korea's social security system?

[Figure 2] Old-age preparations by social stratum: 'Not preparing' (%)

[Figure 3] Evaluation of the social safety net: 'Very + Generally Well Done' (%)

[Figure 4] Evaluation of government middle-class policies (%)

Kwon Hyuk-joo (Department of Public Administration, Seoul National University)