The final phase – 1998 to present – centered on democratic governments and the
quest for a better balance between growth and redistribution. After a long period
of rapid economic growth, the Republic of Korea ran into a sudden financial crisis
in late 1997. This financial crisis was a turning point for the country to rapidly
expand its welfare system. Massive corporate restructuring was carried out for
many companies to retain their competitiveness, and this led to an unprecedented
high rate of unemployment in the process. The government needed to handle a
sharply increasing unemployment rate and poverty rate.