`No. of livelihood aid receipients to jump 10-fold after reunification`

If the two Koreas are reunified, the number of recipients of national basic livelihood assistance will increase 10-fold, which will inevitably increase government spending, according to a study released Saturday. This also means that about 10 percent of South Korea’s GDP will have to be used for public aid after reunification.

Goh Yeong-seon, a senior researcher at the state-run (South) Korea Development Institute, said in the report “Financing in Preparation for Korean Reunification” that raising taxes is inevitable because expected government spending after reunification for public aid and social security insurance cannot be covered by the private sector.

The report said health and welfare, including health insurance, will likely take up the biggest chunk of the spending. “Under the assumption that the North`s population is half of the South`s and per capita healthcare prices of both Koreas are the same, additional spending amounting to 2 to 3 percent of GDP will be necessary,” said Goh.

South Koreans will have to pay more than North Koreans for health insurance because people in the North will be incapable of carrying the same financial burden as those in the South, he added. “The number of recipients of national basic livelihood assistance will likely to soar to 10 million or 20 million from 1.5 million now after reunification. The amount of public aid is also likely to skyrocket from 1.4 percent of GDP to 10 percent."

tnf@donga.com