Multiple recent crises, including the COVID‑19 pandemic and rising living costs, have highlighted the crucial role of income transfers and associated employment support for jobseekers. Benefit systems help individuals and families to manage labour-market risks, and they play a key stabilising role for both households and the overall economy. Effective income support is particularly relevant in the current context of heightened economic uncertainties, and the acceleration of hires and layoffs that is likely to accompany the green transition and the adoption of new production technologies.
Building on recent experience during and before the pandemic, the Korean Government has initiated consultations and a reform process to make income support for jobseekers more effective and accessible. A large share of Korea’s population stand to gain from the income security and employment services afforded by more accessible unemployment support. In the context of Korea’s dual labour market, unstable or intermittent jobs and earnings are very common and associated with poor job quality and low productivity. In addition, more than one in four working-age Koreans were not in employment, education or training prior to the pandemic. Keeping displaced workers and other out-of-work individuals in the labour force, and mobilising the inactive, are central functions of unemployment benefits – especially in the context of Korea’s rapidly ageing population, and risks of worker and skills shortages.
This OECD report supports the Korean Government in its reform efforts by making a case for accessible and effective jobseeker support in the context of Korea’s specific labour market and policy setting. The report summarises the evolution of support policies since the introduction of the Employment Insurance programme in the mid‑1990s. It provides an in-depth examination of the design and performance of existing unemployment support measures, drawing on new empirical analysis. Comparing Korea to other OECD countries, it highlights the low reach and average levels of income support for jobseekers prior to recent and ongoing reforms, setting out policy lessons and priorities to ensure meaningful and employment-oriented support for all jobseekers.
The report welcomes the recent reform momentum towards improving income security for standard and non-standard workers. It concludes that policy initiatives should continue to focus on extending effective coverage, by widening the scope of entitlement rules, by improving support for long-term unemployed, and through the decisive enforcement of existing contribution mandates in all sectors of the economy. It also proposes to strengthen the budgetary basis for reforms by rebalancing spending on legacy programmes towards more targeted and cost-effective measures.