What Does Korea’s Newly Announced 5th Master Plan for Cooperatives Contain?

 In a previous post, we looked at how Korea has been announcing a “Master Plan for Cooperatives” every three years since the Framework Act on Cooperatives was enacted. We also briefly reviewed the key directions of the 1st through 4th Master Plans.

 

<Related post>

Korea Announces a “Basic Plan for Cooperatives” Every Three Years

 

Today, I will take a closer look at the contents of the 5th Master Plan for Cooperatives announced by the Korean government on April 6. This plan will be implemented over three years, from 2026 to 2028. The government stated that it expects cooperatives to play a “central role in solving regional problems and strengthening the social safety net.”

 

(Left) Cooperative establishment scale graph, (Right) Share of workers from vulnerable groups (Source: Ministry of Strategy and Finance)

Current Status and Challenges of Cooperatives in Korea

 

Since the Framework Act on Cooperatives was enacted in 2012, more than 2,000 cooperatives have been established every year. As of December 2025, the total number has exceeded 30,000. The types, sectors, and industries of cooperatives have also diversified, expanding not only in the capital region but also across local areas.

 

These cooperatives contribute to job creation by employing vulnerable groups, engage in local economic activities, and provide social services needed by communities, thereby helping to address regional issues.

 

However, there are also challenges. Despite quantitative growth, many cooperatives face financial instability and difficulties in management. In addition, the level of collaboration among cooperatives—such as federation membership rates and the scale of federations—remains relatively low.

 

Although management disclosure is mandatory for cooperatives and social cooperatives of a certain size, there are many cases where this requirement is not fulfilled on time. There are also regulatory barriers that hinder cooperatives from entering new markets or supplying social services at the local level.

 

From my own field reporting experience, one of the most critical issues is the lack of data and information linkage among relevant ministries, local governments, and public institutions. Data-sharing systems between institutions such as the National Tax Service and the courts are also insufficient.

 

The 5th Master Plan for Cooperatives: The S.M.I.L.E Strategy

 

The 5th Master Plan was established to address these issues and to support cooperatives in becoming key actors in rebuilding local communities.

 

The vision of the plan is “Cooperatives that bring smiles in the field, and co-growth between regions and cooperatives,” and it is structured around five strategies under the acronym S.M.I.L.E.

 

The meaning of S.M.I.L.E is as follows:

 

👉Scale up: Strengthening competitiveness

The plan aims to enhance the competitiveness of cooperatives and reduce management burdens by providing tailored support at each stage of growth and linking them with support infrastructure for SMEs and small businesses. It also includes institutional improvements that take into account the public nature of social cooperatives.

 

While Korean cooperatives have grown quantitatively, many have struggled with management and sustainability. Therefore, this plan focuses more on supporting operation and growth rather than simply supporting establishment.

 

👉Mutual: Strengthening cooperation and solidarity

The plan strengthens the role of federations and promotes the growth of hub organizations so that cooperatives can grow through collaboration and solidarity. It also seeks to expand cooperation across the broader social and solidarity economy.

 

This is intended to address the previously identified lack of collaboration among cooperatives and is expected to help build structures for scaling up.

 

👉Identity: Strengthening identity

The plan reinforces the principles of autonomy, independence, and self-governance, while improving members’ rights to enhance democratic governance. It also strengthens transparency by improving guidance and compliance related to management disclosure.

 

This can be seen as a combined policy and support measure to address issues such as delays in disclosure.

 

👉Local: Expanding community participation

In response to the growing risk of regional decline, the plan strengthens the role of cooperatives in essential local sectors such as housing, tourism, education, healthcare, care services, and rural services.

 

In many regions, community-based problem-solving approaches are already active. However, regulatory barriers sometimes limit implementation. This policy is expected to expand the role of cooperatives at the local level.

 

👉Efficiency: Improving operational efficiency

The plan aims to reform laws and regulations that hinder the establishment and operation of cooperatives, and to strengthen governance and cooperation among central government, local governments, and field actors.

 

Due to the lack of coordination between institutions, there have been cases where similar administrative processes are duplicated or confusion arises in the field. The inclusion of an integrated management system is likely to be a change that practitioners will quickly notice.

 

The Significance of the 5th Master Plan

 

The 5th Master Plan is meaningful in that it responds to both social changes and changes in the cooperative ecosystem.

 

Cooperatives in Korea are divided into those governed by the Framework Act on Cooperatives and those governed by individual laws. Cooperatives under individual laws include organizations such as agricultural cooperatives, while those under the Framework Act include cooperatives that are not subject to these specific laws.

 

Since the Master Plan primarily targets Framework Act cooperatives, many of these organizations are relatively small and less competitive in the market.

 

This plan focuses on helping these cooperatives move beyond quantitative growth toward qualitative growth.

 

Conclusion

 

Korea’s social and solidarity economy has developed largely through policy-driven approaches. The same applies to cooperatives.

 

However, there is now a shift in direction. Policy is moving from a focus on “survival” to “growth,” and there is an increasing call from the field to strengthen self-sustainability.

 

How are cooperatives evolving in your region?

Is the ecosystem shaped primarily by policy, or is it driven by the market?

 

 

Source: Ministry of Strategy and Finance