Funds run in only 14 jurisdictions now; if the law passes, they would expand to all local governments
Greater discretion for local leaders raises questions over control of funds and committee appointments
Greater discretion for local leaders raises questions over control of funds and committee appointments
As the June 3 local elections approach, the social solidarity economy has emerged as a new flashpoint in local politics. Lawmakers are preparing to bring the long-stalled Social Solidarity Economy Basic Act—more than a decade in the making—to a full parliamentary vote. If passed, the law would make it likely that local governments will set up dedicated offices and funds. Supporters argue the policy could complement the market economy; critics warn it risks expanding local authority and public spending. On the 3rd, local governments reported that 14 municipalities—about 6.2% of the country—now operate social solidarity economy funds intended to address polarization, care gaps, and regional decline. Six provincial-level governments—Seoul, Gyeonggi, South Chungcheong, Busan, North Jeolla, and South Gyeongsang—and eight municipal governments—Seongnam, Hwaseong, Seongbuk, Eunpyeong, Seongdong, Gangdong, Jeonju, and Wanju—manage a combined 190 billion KRW (approximately $142.5 million). The Social Solidarity Economy Basic Act was proposed on the premise that structural challenges—low birthrates, population aging, gaps in care, and regional depopulation—cannot be resolved by market forces and government budgets alone. “Because issues such as low birthrates, the energy transition, and regional decline cannot be addressed by government budgets alone, the aim is to tackle them through the social solidarity economy,” Interior and Safety Minister Yun Ho-jung said.
If the bill becomes law, the number of local governments managing such funds would expand to all 17 provincial governments and 226 municipal jurisdictions. The legislation would also establish new bodies and instruments: director-level dedicated offices, a Social Solidarity Economy Committee, development funds, intermediary support organizations, and social solidarity finance intermediaries. That institutional expansion would inevitably increase local leaders’ discretion over fund creation, the appointment of committee members, and the contracting of intermediary organizations. The government envisions using the social solidarity economy to jointly address local job shortages, care needs, and energy transitions, and to build a standing support system that blends public and private resources.
The Korea Social Solidarity Economy, a coalition of groups active in the movement, finalized 44 common pledges across nine policy areas ahead of the June 3 elections. In the energy sector, the coalition proposed a resident-invested, profit-sharing “Sun Pension” model that would create 2,500 village power plants over five years and train 5,000 “solar doctors” to maintain solar installations. In the care sector, key proposals include establishing “Living Care Stations” at town and neighborhood levels and introducing a community primary-care physician system that links medical and welfare services. The platform also includes everyday initiatives—mobile food markets, demand-responsive (DRT) village buses, and public-platform cooperatives—that are meant to address residents’ daily needs.
Still, practitioners have raised concerns about fund management. About 65% of current funds remain in bank deposits or entrusted accounts, prompting calls for blended-finance models that move beyond a focus on small, low-interest loans. Cooperatives grew to 26,539 by 2025, but only 53.8% were actively operating and average net income was negative. Observers caution that simply increasing the number of organizations will not make the system work if private networks and operational capacity to execute projects remain weak.
“If the Social Solidarity Economy Basic Act is enacted, bundling related fund management at the national level would be meaningful, but creating new organizations alone won’t make the ecosystem function,” said Yang Hong-rin, director of the Incheon Social Economy Center. “We need to move beyond a grant-centered model and build investment structures that keep local capital circulating.”
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