This study provides a comparative analysis of the unemployment insurance systems overseas, as well as the structure of unemployment in Korea, with an objective of deriving implications for unemployment insurance in Korea.
Since the 1960s, Korea’s rapid economic growth has been fueled largely by the presence of abundant and highly skilled labor. Until the early 1960s, almost anyone willing to work could get a job in Korea. The reform of the industrial structure in the 1970s, however, has radically raised the demand for highly skilled and educated labor, while causing an oversupply of unskilled labor. This, in turn, has caused the unemployment rate to spike. Long-term measures for reducing unemployment, adjusting labor demand and supply, providing vocational training, and enhancing the security of employment have become critical issues in Korea’s pursuit of further economic growth.
This study evaluates the current status and issues of unemployment insurance systems in other countries. It also analyzes the causes of and groups affected by rising unemployment in Korea, and how the introduction of the unemployment insurance system could affect the labor supply-demand balance, vocational training, and employment security, as well as workers’ willingness to work in the country. Finally, this study discusses the implications of pertinent foreign cases for the future of unemployment insurance in Korea.
The following should be considered before Korean policymakers decide to introduce unemployment insurance: First, while all businesses subject to the Framework Act on Labor should be required, in principle, to participate in an unemployment insurance program, the scope of actual participants should be broadened gradually to allow the system to adjust to early administrative difficulties and acquire initial information. A gradual approach is also necessary to minimize possible problems that may occur by allowing small and unstable businesses to join the program too early. Second, the insurance program should also be closed off to students, housewives, and other groups of people who do not work full time and for whom employment is not their main source of income. The government should limit the pool of beneficiaries to those who have worked for, and paid their premiums during, the stipulated minimum period of time (e.g., between six months and a year) before losing their jobs, and who are willing to keep looking for work after losing their jobs. The amounts of insurance payouts may also be reduced or otherwise readjusted with respect to people who have lost their jobs through their own fault, such as illegal actions, engagement in labor-management disputes, and so forth.
The success of the unemployment insurance system will depend on the presence of complementary and supplementary arrangements and measures, including employment support centers nationwide and a system for collecting and processing pertinent statistics (e.g., turnover rates, types of unemployment, average periods of unemployment, wages, et cetera.). Policymakers will need to prepare thoroughly before instituting unemployment insurance, gathering information and reviewing the estimates on required finances, criteria, eligibility for participating in the scheme, and the details and durations of the insurance benefits.
고용보험제도 도입에 관한 연구(Introducing the unemployment insurance system)
|Journal Title; Vol./Issue||한국개발연구:vol. 3(issue 1)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Employment|
|Holding||KDI; KDI School|