- Open Access
Exploring institutional reform of Korean civil service pension: advocacy coalition framework, policy knowledge and social innovation
© The Author(s). 2018
- Received: 22 January 2018
- Accepted: 19 February 2018
- Published: 28 April 2018
This paper examines what factors are associated with the 2015 pension reform of Korean civil servant as social innovation. We explore what lessons we can learn from the pension reform in terms of the Advocacy Coalition Framework (ACF) model. The ACF model allows us to identify how the substantial reform is, relying on policy knowledge and entrepreneurs, possible in terms of political and social consensus. It also clearly demonstrates the possibility of systematic pension reform at an appropriate level through social learning and policy learning. Through the ACF model, we review how South Korea’s civil servant pension reform act occurred at the end of May 2015. The temporal scope covers from 2009 latest reform, and the 2014’s President administrative policy speech that had strongly been showed her will to reform the pension issue to the end of May 2015 when the reform bill enacted. We investigate each advocacy coalition in order to elucidate the actors that constitute the two coalition groups and to scrutinize whether a policy broker had existed in the process. We also attempt to find the relatively stable parameters and external events that affected the reform and also the belief system that shared by two advocacy coalition group. The result clearly shows that the two coalition groups shared their normative beliefs ultimately, for example, the need to change the current civil servant’s pension system, but, the gap in the numerical change in the policy core belief and secondary belief between the two actors had seemed to be excessively large and uncompromising. A policy broker who can coordinate the interests and interests of stakeholder groups over the government pension reform proposal was desperately needed. Negotiation and leadership of the policy entrepreneurs led to a settlement of the government pension reform proposal at the end of May 2015. Their entrepreneurial activities led to an appropriate level of social consensus on the sustainable reform of pension system through policy knowledge and learning. Further research is required to explore how models of socially innovative forms of governance are created in various pension reforms across various countries. It is also required to examine how policy entrepreneurs use policy knowledge and information for a successful institutional reform through social innovation across various countries.
Knowledge and information are crucial to inducing a grand social consensus on how to define complicated common issues and on how to design reforms to solve them. Knowledge provides policy direction and idea about how to identify and unravel various common issues we face. Social and institutional innovation for global problems and public policy concerns involves heterogeneous interests and competing solutions. It is not easy to find a unified agreeable solution from various political stakeholders, especially not only because of lack of information and knowledge about the resolution but also because of lack of experience to solve them. For instance, it is difficult to design and implement optimal institutional reforms for the public pension, health insurance, and environmental pollutions with social externalities and market failure because of lack of social knowledge about the solution to the reform idea and process as well as a strong political resistance to those reforms.
Various institutional reforms across countries can provide a promising opportunity to learn how social innovation can contribute to reconstructing and harmonizing competing political interests embedded in policy reforms (Dolowitz & Marsh, 1996, 2000; Greener, 2002; Marier, 2009; Martin, 1995; Peck, 2011; Zahariadis & Allen, 1995; Weible, 2007). For instance, the evolution and reform of public employee pension systems across countries' pension reform usually involve a very complicated political and economic interests. Since the 1990s, most developed countries have experienced increasing political and social pressures on the need to reform public pensions due to aging and government fiscal deficits. The Korean government has also received increasing political and social pressures on public pension reforms. The past major reforms of civil servant pension in South Korea took place at 1995, 2000, 2009 and 2015. Compared the three previous pension reforms, the 2015 pension reform has resulted in the most cost-cutting policy alternatives through the participation of various stakeholders and political and social consensus processes. The 2015 pension reform in South Korea provides a meaningful social knowledge about how to induce institutional reform involving complicated political interests.
In a real world, it is difficult to find optimal economic and social solution to complicated political issues such as pension reform. There are very few institutional reforms through political consensus and social innovation leading to sustainable pensions system. Most pension reforms across various countries have demonstrated many failures. Some reforms were successful but most of them were not. However, the 2015 pension reform of Korean civil servant is a relatively rare case of successful institutional reform as social innovation. This reform case provides a good insight of how social innovation leads to successful institution reform. There are still few studies about how policy reforms can be explained as a framework of social innovation in terms of policy knowledge, learning, and entrepreneurs in the policy process.
It is surprising that the massive reform of civil servant pension which is hard to imagine in Europe has been achieved through political and social consensus in a short period of time in South Korea. Until now, past reforms of civil servant pension have focused mainly on short-term effects and once the effects of the increase in contributions have disappeared. However, this time, not only did it actually cut pension rates for the first time, but it also freezes pensioners’ pensions for five years. In particular, the 5-year freeze of pension is significant because the financial effect of pension reform has a positive impact over the long term. The government pension reform proposal has been successfully made with partial sacrifice and concession by public officials.1
Park’s administration in South Korea is the first government who handled the issue in a wholesale with support from the public. That is why the civil servant pension reform in 2015 shows the uniqueness along the other bills. International pension experts highlight that the civil service pension reform in South Korea is successful and desirable in terms of the current reform process and content.2 This pension reform has been regarded as a successful social contract from abroad. It is important to analyze the policy-making process that happens less frequently in society. It is crucial to understand the curiosity of the key policy actors and events for the future government plan that might be repeated.
The composition of this paper is as follows. First, we want to analyze institutional reform such as public servant pension in social innovation and political negotiation process. In particular, we would like to analyze policy processes such as pension reform from the viewpoint of the role of policy negotiators, utilization of policy knowledge, and the learning of civic society on institutional conflicts. Second, we will analyze the reform process of public servant pension based on the model of policy advocacy. Specifically, we would like to focus on the role of policy knowledge and experts. Finally, we emphasize that the solution of the conflicts surrounding the system reform can be analyzed from the viewpoint of policy knowledge and policy community as social innovation.
Innovation research has expanded its scope and applicability to various open innovation areas including social business and industrial areas (Yun et al., 2016). Recent studies have explored how social innovation can evolve from the medical sector (Roh & Kim, 2017) and how to implement social innovation (Svirina et al., 2016). Institutional reform and innovation may be significantly related to social business and social innovation. However, little research has attempted to link institutional reform to social innovation in terms of policy coalition framework such as policy entrepreneurs and policy information.
Current complicated society needs smart social innovation for public interest beyond business innovation for profit (Ackerman & Alstott, 1999; Ayob et al., 2016). Promoting common goods and community values involve sustainable institutional reform to coordinate competing interests from multiple stakeholders. Institutional reform is, however, inherently intertwined with intricate political interests (Christopoulos & Ingold, 2015; Edmiston, 2016). A typical economic innovation that seeks to maximize utility or profits can hardly lead to appropriate institutional reforms for community sustainability. Social innovation would be essential to solving competing interests involved from various stakeholders through political negotiation and social consensus (Mulgan, 2006). Social innovation allows us to learn how to find cooperative negotiation process and how to generate social knowledge through social interactions among various stakeholders (Mulgan, 2005). Social innovation can provide a social agreement on how multiple competing stakeholders come together to develop new practices that traditionally would have emerged only from a bureaucratic, top-down process in various institutional reforms (Mulgan et al., 2007; Murray et al., 2010). The promising solution of an increasingly unequal and social conflict tensions embedded into institutional arrangements and social contract can be derived from social innovation.
Institutional reform as social innovation
This paper assumes that institutional reforms include policy reform as well as other institutional innovations from rules, norms, and social practices in public policy areas. In this sense, social innovation can include various institutional reforms. Pension reform can be regarded as an institutional reform to adjust and change various eligible rules for pension management. In this paper, pension reform is regarded as policy reform including restructuring and transformation of various rules in pension system. Social innovation in public policy comes from an effective response to the conflict that pits the policy entrepreneur against a hostile political milieu. Social innovation should be viewed in terms of achieving political consensus, even if incomplete reforms are sought rather than in radical changes in pension reform. Further, it is a social innovation for conflict resolution that created social expectation and demand to experience policy learning and future consensus.
Social innovation comes from social experimentation and reshapes power relationships (Manzini, 2014; Mulgan et al., 2007; Nicholls et al., 2015). Social innovation involves social experiences to search for new solutions to unsolved social problems (Cajaiba-Santana, 2014; Mulgan, 2006). Social innovation seeks to understand the heterogeneous innovation processes that bring about civil-society-based social changes. Social innovation is politically constructed product of a need or a quest for solutions to various community problems. The first process of institutional reform as social innovation is to diffuse and attain recognition of the legitimacy of an innovative project in various policy reforms. The next process is that policy entrepreneurs are to play a positive or negative mediating role to clear up political barriers, to apply diverse information and knowledge embedded into competing interests and conflicts, and to craft and build political consensus.
There have been various types of research on social innovation. However, they have provided an anecdotal evidence and case studies. The topics about social innovation research cover various areas from community innovation, urban development, and social entrepreneurship. This paper focuses on how social innovation can be contributed to explaining the creating of a greater public interest and the common good in policy reforms.
Policy ideas presented by policy experts have created the basic environment for consensus. In the future, we have created social expectations that policy knowledge and experts can play a greater role in addressing conflicts and suggesting solutions.
ACF model: Information, beliefs and policy learning
Advocacy coalition framework(ACF) describe this political and social process as social innovation to policy transformation for sustainable pension system. ACF and social innovation provide a theoretical framework of the pension reform as political process and social innovation. Relevant stakeholders and political coalitions are involved in the reform process to induce political consensus with common beliefs and agreement. The ACF model describes a useful conceptual framework that explains the stability and change of public policies involving various institutional reforms (Jenkins-Smith et al., 1991; Jenkins-Smith & Sabatier, 1994; Weible, 2007; Weible et al., 2009). It mainly focuses on the coalitions that share normative beliefs and sometimes behave harmoniously. The coalition groups comprehend changes in policy as the results of competition between coalition groups to bring their concepts and beliefs into formal actions. The ACF model is based on the four basic premises.
First, Jenkins-Smith & Sabatier (1994) claimed that time period of a decade or more should be needed to comprehend the changes in policy process and the role of understanding therein. The concentration on a time period of 10 years or more is originated directly from the findings about the understanding the functions of political studies. An inevitable result is that it is the accumulated effect of findings from different researches and also daily-life-knowledge that has powerful influence on policy (Jenkins-Smith & Sabatier, 1994).3 Second, to understand the policy change over such a time span, Sabatier mentioned that the focus should be onto the policy subsystem’s action (1994).4 Some scholars argue that, in nowadays society, the most useful analysis unit for learning policy change is not a specific governmental research center. Rather, policy subsystem actors from various places such like both public and private association who are actively worried about policy problems or current matters are more useful unit to understand the policy change. Third, Sabatier claimed that at least for domestic policy, intergovernmental dimension must be contained inside the subsystems (Jenkins-Smith et al., 1991; Weible, 2007; Weible et al., 2009). This is that policy subsystems, most of the time, include actors from all levels of government. To examine policy change only at the national level will, in most instances, be seriously misleading (Mazmanian & Sabatier, 1989). Lastly, public policies or schemes should be conceptualized as belief systems without a change. The belief system includes such sets of value priorities and certain presumptions about how to achieve them in reality.
The ACF model provides key concepts to explain policy changes like policy reform as social innovation. The first component is the belief systems of each advocacy coalition (Peffley & Hurwitz, 1985). Policy core beliefs which symbolize each coalition are causal understandings and basic normative obligations across a whole policy domain or subsystem at the next level. The ACF assumes that policy core beliefs can be described as a fundamental “glue” of coalitions since they stand for basic understandings and practical commitments within the specialized domain of policy brokers or elites. Another belief is a tool for a coalition’s belief system to achieve its goals. This belief scheme involves policy priorities regarding worthwhile rules from law or financial allocations, the designs of specific association, and the assessments from a variety of actors’ performance. These beliefs are presumed to be more easily adjusted in light of experience, new data or changing strategic analysis and reviews, which may result in institutional reforms to induce social innovation.
The second one is policy coalition to choose one or more policies and strategies that entail the use of ‘guidance instruments’. These are, for example, changes in rules, financial reasons, private, or information. Each Coalition considers it as a means of modifying the behavior of various governmental organizations in an effort to become aware of its policy objectives. Normally, conflicting policies and strategies from a variety of coalitions are interceded by a third group of actors, ‘policy brokers’ as in ACF, whose principal concern is to figure out some reasonable settlements that will decrease and lower the intensity of conflict. The conclusion can be one or more governmental bills or programs, which finally will produce policy outputs at the operational level for like organization permit decisions. These outputs can cause various impacts on targeted matter’s parameters (e.g. entitlements or contribution rate), as well as side effects. On the basis of adequate understandings of governmental decisions and the resultant influences, as well as new data and opinions arising from search processes and external dynamics, each advocacy coalition may alter its beliefs, which are generally in the secondary belief, and its political strategies. The latter may involve the seeking of major agency revisions at the collective choice level, more minor corrections at the operational level, or even going outside the subsystem by seeking changes in the dominant coalition at the systemic level (Jenkins-Smith & Sabatier 1994).
The third one is policy learning to bring on social innovation. Within the overall process of policy change, the advocacy coalition framework has a peculiar interest in policy-oriented learning. Policy-oriented learning refers to behavioral intentions or to relatively enduring alterations of thought. The alternations will result from experience or the new information which are concerned with the modifications or attainment of policy objectives. Policy-oriented learning includes (1) increased information of problem parameters and the factors that affect them, (2) the inside feedback loops described in Fig. 2 regarding policy effectiveness, (3) perceptions concerning external dynamics, and (4) changing understandings and awareness of the probable impacts of other substitute policies. The advocacy coalition framework presumes that such learning is a tool that members of a variety of coalitions attempt to understand the world better in order to further their policy objectives. Given that conceptual filtering is a fundamental element of the ACF’s model. The individual members from coalition will defy information suggesting their deep core belief or policy core beliefs may be invalid or unattainable and usually will use formal policy analyses to elaborate and support those beliefs or attack their opponents’ opinions.
Pay off matrix of building political consensus for the 2015 pension reform of Korean civil servants
Advocacy Coalition A (Disagree on Reform: Minority Party, Union)
Advocacy Coalition B (Agree on Reform: Majority (Ruling) Party, Blue House)
Based on the nature of the pay-off matrix, the optimal strategy is Output3, where the coalition A group disagree on the reform and the coalition B group agree on it. In other words, Output3 means we cannot develop a political consensus for the pension reform. The reform consensus is possible at only Output 4. However, the coalition A disagree on Output 4 because this group does not want to reform. What factors can build the reform consensus by relocating from Output 3 to Output 4. Policy knowledge generates political pressure that pushes the coalition A group into agree the pension reform and policy entrepreneurs also persuaded the coalition A group into accepting the reform proposal. Policy entrepreneurs explored a common ground that both coalition groups can agree on, where the pension reform proposal involved the parametric reform. The pension reform process can be regarded as social innovation allowing political consensus with competing political interests and providing a learning opportunity of social learning that Korean society.
Policy implications and further research
The ACF model provides social implications about how to induce significant policy reform through constructing common values and beliefs. More specifically, this case suggests that policy knowledge and information about pension reform proposals can play a key role in preventing stakeholder groups from leaving the line of the pension reform. A detailed roadmap for specific policy alternatives and pension reform proposals was specifically reported in the media, creating an atmosphere for social consensus (Radaelli, 1995). Specific information or policy knowledge on institutional reforms from relevant stakeholders has put pressure on social consensus. In particular, if information and knowledge on specific pension reform proposals were not provided to the public through policy experts with diverse stances from online mass media, resistance from public employee unions’ pension reform would be strong. The presentation of alternatives to the pension reform proposals from the Korean Pension Association as well as policy experts involved in the ruling party and the opposition party prompted national consensus on the necessity and necessity of reforming the public employee pension system. Specific and clear information may prevent seeking to blame games for competing solutions to massive institutional reforms (Weaver, 2010).
Due to the increasing social pressure on civil unions, civil unions have accepted pension reforms. Social innovation is achieved through the pressure on stakeholders to draw concessions and sacrifices. The appropriate level of civic responsibility and pressure for stakeholders surrounding pension reform is an effective factor in eliminating the obstacles to complex pension reforms. In addition, stakeholders involved in pension reform learn from civic responsibilities to reduce social conflicts, providing fundamental assets of sustainable social innovation. In summary, policy knowledge about specific concrete policy alternatives to pension reforms has put a great deal of social pressures on the government to restrain the resistance of civil unions and to encourage social consensus on reform proposals. In addition, the government and the ruling party had a strong push for President Park’s will - public sector reform. In the Public Sector Reform Program under the Park Administration of South Korea, reform of the public pension system was set as the most important priority. These government-led strong reform initiatives played a fundamental role in the pension reform proposal. In addition, policy entrepreneurs attempted to build a strong link between positive government intervention and policy knowledge. These factors contributed to inducing a political consensus to the pension reform proposal. Further, this policy experience and learning to achieve political consensus to pension reform with competing interests in South Korea will provide social asset to facilitate future institutional reforms as social innovation.
The study still shows some limitations in using the ACF model to the 2015 South Korea civil servant pension reform. First, as mentioned early that one of the ACF model’s premise is based on the 10 years administration period. Unlike from the United States or other countries that usually last decade for the presidential period, the administration in South Korea only activates 4 years. Second, as most of the references are based on the news, statements, and speech, it was hard to know the changes in the attitudes of each actor or the process of progress during the meeting thoroughly. Future research is required to interview each actor and find out how and why they changed their stances and positions. In addition, it is necessary to study social knowledge and experience about how political consensus on various social conflicts and policy agenda are formed and what civic learning and skills are useful for the reform process (Stone, 2001, 2002). Finally, we need a better theory to explain how knowledge and ideas can contribute to solving various political and social dilemmas embedded into public and social agenda for community innovation(Bekkers et al., 2013; Béland, 2005). Future research is required to examine various successful or unsuccessful policy reforms derived from policy ideas and knowledge.
The contribution and burden ratio of the public employee pension law is raised from 14% to 18%, the pension payment rate is reduced from 1.9% to 1.7%, and the survivor pension benefit rate is 60% from 70% Respectively. The pension age will be adjusted gradually from the current age of 60 to 65 and the retirement pension and survivor pension amount will be frozen regardless of the price level for five years from 2016. The pension reform of Korean civil servants came into effect from January 1, 2016 and would be expected to reduce approximately the amount of 1.5 trillion won in 2016 and 497 trillion won within 70 years in the future.
Bernd Marin, director of the Austrian Institute for Social Welfare Policy, said it was a tremendous success for Korea to make pension reforms in a relatively short period of time, which is difficult to draw social consensus in the short term in Europe. In addition, Hashimann, a director of pension bureau, who works for the Austrian prime minister, said, “The 4% increase in contributions made by Korean officials and the Korean government through the reform over the past four years is a courageous choice in the world.” He also mentioned, “It is desirable to downgrade the annual pension rate gradually from 1.9% to 1.7% over 20 years.” Junichiro Sakamoto at Nomura Research Institute of Japan also ranked South Korea’s civil service pension reform as a great success.
For instance, Weiss & Bucuvalas (1977) argued that a concentration below 10 or less years on policy decision-making eventually will underestimate the influence of policy analysis because certain study or works are made primarily to modify the perceptual systems of policy establishers over time. For example, the literature writings or great works on policy tools also shows to the need for time frames of 10 years or more, to finish at least one implementation or reformulation cycle and to gain and acquire a reasonably accurate picture of success and failure. Many of studies have described that enterprising plans or schemes that appeared after several years to be mean failures gained more favorable scores in assessments when considered in a longer time period, initial successes may be vaporized over time vice versa (Sabatier & Jenkins-Smith, 1994).
For example, inside the policy subsystems, there are interactions between actors from various institutions and coalitions that try to seek, follow or influence the governmental decisions in a political field. Scholz insisted that the concept and image of policy subsystems should be expended from traditional view of iron triangles limited to single level of government such as political associations, legislative committees, or interest groups to more profound levels such like actors from various government positions, as well as press, policy analysts or reporter who play important roles in the creation, dissemination, and criteria of policy plans (Scholz, 1991).
All the members of SOItmC conference listed below contributed to the design of the study and this manuscript and all have approved the manuscript’s content.
Chan-woo Kim (GSPA, Seoul National University), John Yi (Saint Joseph’s University, USA), Deborah Dougherty (Rutgers University), Seung-Hee Lee (Southern Illinois University, USA).
Not applicable. No funding was received.
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Not applicable. This manuscript does not contain any data set.
KL has written this manuscript. KJ has managed the structure of manuscript and the terms that used in manuscript. Both authors read and approved the final manuscript.
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