The COVID-19 pandemic has underlined the importance of statutory social protection for sick workers, which uniquely protects their health, jobs and incomes. Soon after the start of the pandemic, several countries reacted promptly by expanding the coverage of sickness benefits, including to self-employed workers or those in quarantine, and by reducing the cost of sick pay for employers. Countries that had only weak or no country-wide statutory social protection for sick workers in place at the time, such as Korea and the United States, introduced temporary protection for those workers. Other countries with less generous sickness benefits, such as New Zealand and Canada, introduced higher temporary emergency benefits.
Building on the experience of the pandemic, the then Korean government has decided to close the last existing gap in its fast-expanding social protection system and introduce a sickness insurance system. Consequently, it has agreed on running sickness benefit pilots in several regions to test the health and labour market implications of different models for sickness benefit regulations.
This report supports the Korean government in its reform efforts by making a case for a strong and effective system of social protection for sick workers and summarising the literature on the impact of such a system on the health, productivity and labour market attachment of workers. The report also looks in depth at some of the key features of effective sickness protection, including: coverage and eligibility criteria; payment levels, payment durations and waiting times; return-to-work characteristics and employer involvement; and funding mechanisms.
The report suggests that Korea should consider introducing a system with: wide coverage, including all employees and self-employed workers; with entitlements that are in line with the ILO’s Medical Care and Sickness Benefits Convention from 1969; and with a strong return-to-work focus. It also suggests that the country’s business culture, characterised by long working hours and a reluctance by many workers to fully use leave entitlements, will make it critically important to ensure high take up of any new sickness benefits. Lastly, while the reform efforts in Korea are currently limited to the introduction of a public sickness insurance, as part of the existing health insurance, the report also makes the case for the parallel introduction of statutory employer-provided sick pay, regulated in the labour law, as a second pillar of an effective social protection system for sick workers.
A related report considers reform efforts and directions in Korea to make jobseeker support, which was initially introduced in the mid-1990s, more accessible and more effective.