Two Years of Seoul’s Stepping Stone Income Pilot: 8.6% Exiting Welfare, 31% Increase in Earned Income

(MENAFN- PENTA PRESS) Seoul’s flagship income guarantee program, Stepping Stone Income (formerly “Safety Income”), has demonstrated significant progress in its second year. This innovative welfare model aims to provide a safety net while promoting economic independence, addressing gaps in traditional welfare systems.

Key findings reveal that 8.6% of participating households have exceeded 85% of the median income threshold, making them no longer eligible for program benefits. This figure marks an increase of 3.8 percentage points compared to the first year’s 4.8%, highlighting the program’s success in facilitating financial independence.

Additionally, the proportion of households with increased earned income rose significantly from 21.8% in the first year to 31.1% in the second year, reflecting a 9.3 percentage point increase. This outcome is attributed to reduced anxiety about losing welfare eligibility, encouraging active participation in the labor market.

Unlike universal basic income, which provides a fixed amount to all citizens, Stepping Stone Income adopts a redistributive approach. It supplements a household’s income proportionally based on its deficit relative to the median income, offering greater support to those with lower incomes.

The program is designed to maintain eligibility even if a household’s income temporarily exceeds the threshold, ensuring stability and safeguarding against sudden income fluctuations. Moreover, the program’s structure incentivizes work by allowing total household income to grow as participants earn more.

The second-year study encompassed 1,523 households in the first phase (below 50% of the median income) and 3,588 households in the second phase (below 85% of the median income), expanding the scale and duration compared to the first-year analysis. Surveys and objective income data collected over two years (May 2022–July 2024) contributed to the robust findings.

Key outcomes include:

• 8.6% welfare exit rate: 132 households transitioned beyond the eligibility threshold in the second year, compared to 23 households (4.8%) in the first year.
• 31.1% earned income growth: A significant improvement, up from 21.8% in the first year, demonstrating enhanced work incentives.
• Labor participation boost: Non-working households receiving Stepping Stone Income were 3.6 percentage points more likely to start working compared to non-participating households.

Participants have utilized their income support flexibly, with households prioritizing caregiving and education. For example, families with elderly members or young children reduced working hours to allocate more time to caregiving, particularly in female-led households.

Investments in education and training also surged, with participating households spending 72.7% more on education-related expenses than comparison groups, fostering long-term socioeconomic mobility. Savings also increased by 11.1%, helping participants prepare for the future.

The Seoul Metropolitan Government will finalize its three-year analysis by June 2025, using collected data to assess the program’s effectiveness and feasibility as a national model.

Seoul Mayor Oh Se-hoon emphasized, “Stepping Stone Income has proven its value in boosting incomes and work motivation. It provides a safety net for those in need while enabling them to overcome challenges and move forward. I hope this initiative becomes a nationwide model and a global example of innovative welfare.”

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