The lack of statutory social protection for sick workers is a major blank in Korea’s current social protection landscape. It leaves many workers experiencing temporary sickness without essentially any job or income protection. The importance of sickness programmes in protecting workers’ jobs, incomes, and health, as well as the health of workplaces and entire societies, has become very apparent during the COVID‑19 pandemic, when Korea had to introduce some ad hoc measures to fill part of the gap. The implementation of statutory sickness benefits in Korea would also be a major step forward to improve job quality, social protection, and labour market inclusion of those more prone to health problems. Particularly important in Korea and further discussed below, an equitable and adequate sickness programme would help to reduce the cultural stigma of taking leave, especially if employer-provided sick pay also became mandatory.
Korea’s Pilot Project for Sickness Benefits shows that there is significant political momentum for change. Yet, the three pilots are far from what an ideal system of social protection for sick workers would look like. Korea could be more ambitious and use its position as a relative latecomer in this policy field to get an optimal system in place right from the start:
Cover all workers against all diseases that can cause temporary sickness. Korea should make all efforts to cover its large groups of non-standard workers – including employees on temporary contracts, those working part-time, those in small firms and the self-employed. It is laudable that all workers, including the self-employed, are eligible to the 2022 Pilot Project for Sickness Benefits. However, Korea should provide entitlements regardless of severity or type of sickness. Any plans to limit access to hospitalised workers should be reconsidered.
Provide adequate income support while limiting undue absenteeism. Providing adequate income replacement is important to allow sick workers to stay home to recover. Full income replacement for an unlimited period, however, may augment undue absenteeism and hamper return to work. Korea’s Pilot Project seems to pay limited attention to income adequacy. The proposed waiting periods of seven or even 14 days would be very long in international perspective. The proposed benefit level of a fixed amount of KRW 41 860 (EUR 31) per day of sick leave – 60% of the minimum wage – is among the least generous. Both parameters are also far off the principles laid down in the ILO convention on sickness benefits, which poses a maximum waiting period of three days and a minimum payment rate of 60% of the worker’s own previous earnings.
Combine sickness benefits with a robust return-to-work component. An effective social protection scheme for sick workers promotes recovery and return to work of (partially) recovered workers early during a sickness absence spell. Proven effective principles include a focus on remaining work capacity throughout the sickness spell, the promotion of accommodating sick workers in their workplaces and a focus on gradual return to work. It requires active involvement of all actors – workers, employers, certifying doctors and relevant authorities. Information on any return-to-work efforts in Korea’s Pilot Project is not available. Korea could draw from its successful programmes in its workers’ compensation system and consider extending the obligations for employers to provide reasonable accommodation to all employees experiencing temporary sickness, to enable these workers to access, perform and advance in their jobs.
Design financially sustainable payments that encourage employer involvement. Out of the 36 OECD countries with statutory social protection for sick workers, 30 require employers to carry part of the risk associated with temporary sickness. Such financial liability gives employers strong incentives to prevent sickness absence and promote return to work. Experiences from other countries show that employer liability does not need to be costly. At this stage, Korea’s Pilot Project only foresees and evaluates the introducing of sickness benefits.
Several issues deserve particular attention in the Korean context. Korea should not delay the implementation of income and employment protection for temporarily sick employees. Korea, together with most states in the United States, is currently the only OECD country without statutory social protection for sick workers. This gap in social protection means that a temporary sickness can easily lead to job loss – a situation that is not just for workers and not efficient for the Korean labour market and economy.
It would be beneficial to also pilot-test the introduction of statutory employer-provided sick pay. In most OECD countries, sick pay and sickness benefits are two parts one system – and in many countries, workers could not even tell the difference. In Korea, conversations on employer-provided sick pay seem to advance at a slow pace and are disconnected from the discussion on sickness benefits. This is unfortunate, given the important advantages of a period of employer liability during the initial phase of sickness. Actively involving social partners in the design can help facilitating the dialogue and the implementation later.
Korea should keep equity issues in mind when introducing a new system. The sickness benefit parameters in Korea’s Pilot Project are much less generous than those in the statutory system for Korean government officials – a system that provides full wage replacement without any waiting period for up to 60 sick days per year. Such a large difference will reinforce Korea’s already segmented labour market. Instead, Korea should seize this opportunity to implement adequate sick leave for all to reduce labour market duality.
The Korean government should consider making sickness benefits dependent on previous earnings, especially if funding will come from insurance contributions. Korea seems to opt for social insurance funding to pay for sickness benefits, as it does for other parts of its social protection system. Contributions for these insurances depend on earnings. Coupling funding to earnings but offering earnings-independent benefits would reduce the legitimacy of the new programme. Indeed, the (few) OECD countries that provide fixed amount payments all fund their sickness benefit through general taxation.
Most OECD countries manage sickness benefits as part of their health insurance. While this seems a logical choice because many of those people will also need medical care, at least during a certain period, the choice comes with several disadvantages caused by an inherent medicalisation of what is often a labour market problem. Sickness and disability programmes in most countries have struggled to make the switch to a labour market-oriented programme for this reason. Ideally, sickness programmes are viewed as employment policy: protecting workers’ incomes and jobs so that employment relations remain intact, whilst facilitating recovery and return to work. To achieve this, Korea could also consider tying a new sickness system to its employment insurance, like Canada. By offering such protection, it promotes health of workers and societies. The main argument for tying a new programme to the health insurance is the higher coverage of workers in Korea’s health insurance, compared with its employment insurance.
A particular pernicious issue in Korea is a strong business culture that prevents workers from taking leave – be it annual leave, sick leave, or any other leave. Sickness benefit programmes can only be effective if sick workers use the scheme to stay home and recover. Cultural change is hard to achieve but not impossible. For instance, Korea’s strong traditional preference for sons has recently shifted to no gender preference or even a greater preference for daughters (Seo, Koropeckyj-Cox and Kim, 2022[119]). The Korean government can take several measures to stimulate a cultural shift in leave-taking behaviour.
Make entitlements mandatory. A statutory entitlement to equitable and adequate sickness benefit is a sine qua non to normalise taking leave because of temporary sickness.
Address widespread labour market duality. The impact of sickness benefits will be stronger if Korea also makes further efforts to address widespread labour market duality and job insecurity. This includes the elimination of incentives to hire workers on non-regular employment contracts and to engage dependent self-employed workers (OECD, 2018[1]). Job insecurity in Korea is strongly associated with presenteeism (=going to work sick) instead of absenteeism (Kim et al., 2020[120]).
Improve enforcement of labour legislation. This includes increasing the number of labour inspectors and enhancing their skills. Compliance with labour legislation is weak in Korea. For instance, about half the overtime hours were unpaid in 2016 and about 10% of the employees in 2016-2017 were paid below the minimum wage (Choi, 2018[121]). Around 40% of all wageworkers in Korea engage in some form of informal work, here defined as work that is not fully covered by minimum wage regulation, labour standards and social insurance. The current government has increased the number of labour inspectors thereby reducing the number of workplaces per inspector from 1 150 in 2016 to 690 in 2021 but this is not enough.
Learn from the lessons of the COVID-19 pandemic. Academic evidence for the United States clearly shows that the introduction of statutory social protection for sick workers decreased the spread of COVID-19 (Pichler, Wen and Ziebarth, 2020[27]). Indeed, by lowering infection rates, sickness programmes contribute to lower total sickness absence (Pichler and Ziebarth, 2017[15]; Pichler, Wen and Ziebarth, 2020[27]).
Consider adopting additional measures to facilitate staying at home when sick. A first promising measure is a statutory entitlement to remote working, to accommodate workers with remaining work capacity experiencing sickness or disability. Such a statutory entitlement should be available to all employees, without requiring a particular reason, and employers should only be able to refuse this on the basis of strictly defined and limited grounds (OECD, 2021[54]). Korean employees currently do not have a statutory right to request remote working.1 In addition, the Korean government should make forcing sick workers to come to work illegal and may even want to consider coming to work sick illegal for employees.
Provoke a cultural shift in companies towards valuing efficient output rather than office hours. The use of rigorous performance management systems and High-Performance Work Practices (HPWPs) that emphasise the importance of good working conditions for high productivity and profitability for firms should be promoted (OECD, 2018[122]). Leading-by-doing practices by the government as well as disseminating information showing that being sick at work is not necessary and runs even counter to high-quality work may help (OECD, 2019[55]). Such information should particularly be disseminated to social partners, who may not be informed of the strong positive labour market impact of equitable and adequate sickness benefits.