[K Case Study] Why Combine Rural Basic Income with the Social and Solidarity Economy?

 South Korea is now entering a super-aged society while simultaneously confronting the threat of local extinction. As of 2025, people aged 65 and older account for more than 20 percent of the national population, placing the country in the category of a super-aged society. At the same time, 57 percent of all cities, counties, and districts have been designated as areas at risk of population decline, while the share of people aged 65 and older in the farm population has already exceeded 50 percent. These structural changes are unfolding even more rapidly than they did in many advanced economies, to the point that those countries are closely watching how South Korea responds.

The Lee Jae-myung administration is now making a full-scale policy effort to address the crisis of local extinction by linking the vision of a Basic Society with the Social and Solidarity Economy (SSE). Why should the country take this path, and how can it reach the milestones ahead? Many questions remain to be answered.

1.1. The Decline of Rural Korea and the ‘Basic Society’ Paradigm

What the Statistics Reveal: Shrinking Local Markets and Fractures in the Human Supply Chain of Everyday Life

Rural Korea appears to have moved beyond simple population decline and into a phase of functional deterioration, as the people and organizations that have long sustained everyday community life gradually disappear.

• The retreat of commercial markets and the spread of food and healthcare deserts: In many township-level areas, commercial banks, pharmacies, and clinics have closed one after another. Even Nonghyup Hanaro Marts have withdrawn or reduced operations because of declining profitability. As a result, older residents in some areas must travel to the nearest town center simply to buy a block of tofu or obtain basic medication, creating what may be described as food and healthcare deserts.

• Dependence on migrant labor in primary production and the weakening of the everyday Human Supply Chain: Much of the physical labor in agriculture and fisheries is already performed by foreign migrant workers. Yet the Human Supply Chain that sustains the daily lives of older rural residents—including accompaniment to hospitals, care services, local transportation, delivery of daily necessities, and the operation of community spaces—continues to rely, often precariously, on public administrative programs. Even when budgets are allocated, many communities lack the trained personnel and locally rooted organizations needed to carry out these services effectively. As a result, projects are often implemented only in form rather than in substance.

Searching for a New Policy Paradigm: From Rural Welfare to a Basic Society

What is the Basic Society vision?

The Basic Society may be understood as a national vision that goes beyond fragmented welfare measures designed to fill gaps in the social safety net after they appear, or policies limited to income redistribution. Grounded in the constitutional rights to pursue happiness and to enjoy basic human rights, it seeks to ensure that everyone can effectively access the essential goods and services required for a dignified life—including income, mobility, care, food, and healthcare—regardless of where they live. It is therefore more than a welfare subsidy that uses cash to compensate for deprivation. In rural areas where commercial markets have weakened, it represents a structural effort by the state, local communities, cooperatives, and SSE organizations to rebuild sustainable systems for providing essential goods and services.

Why is an approach distinct from conventional rural welfare needed?

There is a growing view that conventional, benefit-oriented rural welfare policies have not been sufficient to reverse the collapse of infrastructure and the continuing outflow of population. The Basic Society approach, understood as a strategy for rebuilding systems of essential provision, is being discussed as an alternative for roughly three reasons.

• A shift from supplementation to the renewal of provision systems: Cash benefits alone do not necessarily transform everyday life on the ground. The Basic Society approach seeks to establish a system through which essential goods and services can be delivered consistently to all rural residents by combining basic income, which creates purchasing power, with the restoration of local markets and provision networks.

• An expansion from welfare policy to a strategy of local economic circulation: Rather than treating rural policy simply as the execution of welfare budgets, this approach reframes it as a strategy of local economic circulation: income is injected into the community, demand for essential goods and services is created, local provision networks and jobs are formed, and economic leakage from the area is reduced.

• An expanded understanding of the fundamental right to remain in rural communities: Rural residents generate public value through food security and environmental stewardship, yet they have often been marginalized as essential services and local provision systems have contracted. This raises a national question: how can the state guarantee people the right to remain in their communities and sustain a dignified everyday life, regardless of where they live?

1.2. One Promising Alternative for Rebuilding Provision Systems: Why the Social and Solidarity Economy?

The Simultaneous Contraction of Commercial Markets and the Crisis of Local Provision

Population decline reduces the size of consumer markets, which in turn tends to trigger a chain reaction of contraction across the commercial ecosystem of rural communities.

• The withdrawal of commercial capital: Commercial firms that prioritize return on investment tend to withdraw from rural areas first. This can sever the systems through which people obtain daily necessities, transportation, care, and healthcare, making even the maintenance of ordinary life increasingly difficult.

• The limits of government-led approaches: Approaches centered on building facilities with public funds or having government officials lead projects are often criticized as standardized, inflexible, and difficult to sustain. When subsidies end, operations may cease as well. Government-led approaches nevertheless have strengths in establishing initial infrastructure and delivering standardized services, so the two approaches should be seen as complementary rather than mutually exclusive.

The Social and Solidarity Economy as a Locally Rooted System of Essential Provision

The Social and Solidarity Economy (SSE) is receiving attention as one of the most promising actors capable of rebuilding the systems of essential provision that commercial markets have abandoned.

• Definition: The SSE should not be understood merely as a collection of volunteer organizations. Rather, it is a privately initiated economic system whose primary purpose is to solve community problems and strengthen residents’ capacity for mutual self-help, rather than to maximize profit.

• Its role as a system of essential provision: Residents participate simultaneously as investors, consumers, and operators, seeking to produce, distribute, and consume essential services—such as transportation, care, healthcare, and energy—within the community itself when private capital is no longer willing to provide them.

Note: SSE organizations also face their own constraints, including labor shortages, limited start-up capital, and uneven management capacity. Their success should therefore not be assumed; sustained support and capacity-building must accompany any effort to expand their role.

Examples of locally rooted provision systems in practice

• Energy and income provision: the Shinan County Solar Power Cooperatives: In Shinan County, an area facing the risk of local extinction, residents have participated in cooperatives and shared the benefits generated by renewable energy projects, including solar and wind power, through a system known as the “Sunshine Pension.” [1] The case is often cited as an example of how energy revenues that might otherwise be monopolized by large outside corporations can instead be returned to local residents as income and as a foundation for local provision.

• Healthcare and care provision: the Hongseong Health and Welfare Social Cooperative (Our Neighborhood Clinic): In Hongdong-myeon, Hongseong County, South Chungcheong Province, where attracting a private hospital is difficult, local residents and healthcare professionals established a cooperative, opened a clinic, and developed a system of home visits and care. [3] The initiative is regarded as a model in which community self-help has supplemented rural healthcare and care systems that the private market was unable to provide.

1.3. Toward Local Economic Circulation and Rural Communities Where People Can Remain

The Limits of Externally Driven Development and the Need for Endogenous Local Economic Circulation

Rural policy has long placed considerable emphasis on attracting large outside corporations and undertaking major construction projects. Yet this externally driven model of development is regarded by some as having failed to prevent economic leakage, whereby money generated locally flows out of the region.

• Moving toward endogenous local economic circulation: One proposed direction is to use local resources and income as seed capital—including Rural Basic Income as an initial catalyst—so that money is spent repeatedly among residents, local businesses, and SSE organizations. This would create an endogenous circulation structure and generate a local multiplier effect.

What Shinan County’s ‘Sunshine Pension’ Suggests About the Circulation of Population and Income

Shinan County’s Renewable Energy Community Benefit-Sharing Scheme, commonly known as the Sunshine Pension, is frequently cited as a leading Korean case demonstrating how income security can affect rural communities.

• Higher income and signs of reverse migration: Some island communities receiving the Sunshine Pension have reportedly experienced an inflow of residents, while older residents have seen an increase in real income. [1]

• The circulation of money through local currency: The Sunshine Pension is paid in local currency, including the “1004 Islands Shinan Gift Certificate.” This has helped keep household income from flowing out of the county and encouraged spending at local traditional markets and shops, producing effects associated with local economic circulation. [2]

1.4. The Goal of a Virtuous Cycle: Income–Demand–Provision–Employment–Settlement

The model envisioned by combining Rural Basic Income with the SSE seeks to bring together the changes in income and population observed in Shinan County with the community-based provision model demonstrated in Hongseong County. The success factors of these two regions should not be generalized uncritically. Fiscal sustainability and differences in local conditions must be examined, and any wider application should proceed in stages.

• Stage 1 — Creating income and demand: Rural Basic Income creates effective purchasing power among residents and brings latent demand for essential goods and services into view.

• Stage 2 — Building provision systems: Collective subscription models are combined with the SSE—including cooperatives and community enterprises—to develop locally tailored systems for providing essential goods and services.

• Stage 3 — Strengthening circulation and creating jobs: The aim is to increase the velocity of money within the local economy and create sustainable jobs that enable people to settle and remain in the community.

• Stage 4 — Creating conditions for settlement: By reducing economic leakage and improving quality of life, rural communities can gradually move toward becoming self-sustaining places where people are able to remain and thrive.

Conclusion: Why the Social and Solidarity Economy?

What the Sunshine Pension in Shinan and the healthcare cooperative in Hongseong have in common is not simply that they are successful examples of income security. Their significance lies in the power of a shared organizational structure. In both cases, residents participate as producers, consumers, and owners at the same time, forming a prosumer structure. Commercial capital is reluctant to assume a producer role in rural areas where profitability is low, while government-led approaches tend to confine residents to the role of consumers or beneficiaries. The SSE, by contrast, places local residents simultaneously in the positions of producer, consumer, and owner. This makes it possible for income to be generated within the community, spent again within the community, and returned to residents in the form of shared benefits. For precisely this reason, the income security provided by Rural Basic Income can move beyond a one-off supplement and become part of a sustainable system of provision only when it is linked to the SSE’s reorganization of production and ownership.

References

[1] Daum News, ‘Shinan’s “Sunshine Pension” Official, Whom President Lee Ordered Others to Learn From: Up to KRW 6 Million per Person Annually,’ December 16, 2025. Cited for the cumulative amount paid through Shinan County’s Sunshine and Wind Pension scheme (KRW 31.7 billion) and the share of residents receiving benefits (approximately 45 percent of the county’s population). https://v.daum.net/v/20251216174503080

[2] Mokpo National University, ‘Lunar New Year Special: The Miracle of the 1004 Islands Created by Sunlight and Wind,’ January 24, 2025. Cited for the payment of the Sunshine Pension in local currency, including the 1004 Islands Shinan Gift Certificate, and examples of quarterly payments by area. https://mnuk2.mokpo.ac.kr/bbs/islands/382/270625/artclView.do

[3] Daum News (Kyunghyang Shinmun), ‘When the Doctor Collapsed, the Village Came to a Halt—Can “Our Neighborhood Clinic” Reopen?,’ January 18, 2026; Naepo News, ‘Our Neighborhood Clinic Sees Growth in Both Members and Patients,’ March 24, 2025. Cited for the official name of the Hongseong Health and Welfare Social Cooperative, its establishment in May 2015, and its location in Hongdong-myeon. https://v.daum.net/v/20260118100217059 · https://www.naeponews.co.kr/news/articleView.html?idxno=42061

About the Author

Dr. Kim Seong-gi (Social Welfare)

Director, The Care Biz Lab

Chair, SE Empower Social Cooperative

Email: skkwelfare@gmail.com