Marius Lüske
OECD
Strengthening Active Labour Market Policies in Korea
Connecting People with Jobs
4. Active labour market policies for groups with vulnerabilities
Abstract
Some groups of jobseekers face labour market barriers more often including young people, older jobseekers, people with disabilities and mothers with career breaks, making them more vulnerable to labour market exclusion. All these groups have low employment rates in Korea, often due to a combination of labour market barriers and social barriers. Korea earmarks more than half of its expenditures on active labour market policies (ALMPs) exclusively to these groups. The types of ALMPs that are available for different vulnerable groups vary considerably, and this chapters analyses the support that are available for different types of vulnerable groups. Experience from other OECD countries can be beneficial to extend and diversify the services and programmes that are on offer to help those most in need of support.
4.1. Introduction
Promoting the inclusion of vulnerable groups in the labour market is a policy priority for governments across OECD countries. Vulnerable population groups, which encompass – but are not limited to – individuals with disabilities, the long-term unemployed, youth, and people with care responsibilities, encounter unique and pressing challenges in accessing and sustaining employment.
Recognising and capitalising on the diverse talents and competences of individuals in these groups not only fosters a more inclusive and equitable labour force but also mitigates the risk of labour shortages. From the perspective of jobseekers with vulnerabilities, ensuring their integration or reintegration into the workforce, even after long periods of unemployment or inactivity, is crucial to prevent the gradual erosion of skills which can reinforce existing employment barriers and perpetuate a cycle of exclusion. From an employer’s perspective, fully harnessing the labour potential of vulnerable groups is necessary to ensure a sufficient labour supply, especially against the backdrop of a quickly shrinking working-age population.
This chapter presents and assesses Active Labour Market Policies (ALMPs) for groups with vulnerabilities. It starts by describing some of the groups that face the biggest labour market barriers in Korea (Section 4.2). After that, it assesses ALMPs for vulnerable groups in Korea with a critical eye, aiming to identify areas for improvement, building on the experience of other OECD countries in designing ALMPs for groups with vulnerabilities (Section 4.3). The final section concludes.
4.2. Vulnerable groups in the Korean labour market
In Korea, as in other OECD countries, vulnerable groups of jobseekers are confronted with particular difficulties to secure and retain employment. These employment difficulties lead to a higher risk of dependency on welfare payments and risk exacerbating broader social challenges. In this context, targeted, individualised and comprehensive interventions are needed to make it easier for jobseekers with vulnerabilities to access high-quality job opportunities in line with their needs and abilities (OECD, 2021[1]).
Among the groups that face specific vulnerabilities in Korea and a high probability of relying on welfare payments are: people with disabilities; young unemployed and inactive people; low educated people; older people; and women with career breaks, many of whom have care responsibilities.
4.2.1. Young unemployed and inactive people
Employment levels among young Koreans are low. This poses challenges for Korea as both youth unemployment and inactivity have long-lasting negative impacts, reducing future employment opportunities and increasing the likelihood of unstable career histories at later stages in life.
One of the reasons contributing to poor labour market outcomes among youth is the pronounced mismatch between skills of young people and labour demand (Jones and Beom, 2022[2]). Many young Koreans prefer to invest massively in formal tertiary education, and then queue for stable jobs in large companies or the public sectors, rather than taking up employment in small and medium-sized enterprises (SMEs). This pattern is linked to the deeply enrooted dualism in Korea’s labour market, with safe and well-paid jobs with public or large private employers, and precarious jobs paying low wages, often in SMEs. Once in precarious employment, the chances of upward mobility towards better paying and more secure jobs are low.
The pronounced dualism in the labour market contributes to a situation where the share of university graduates is highest among all OECD countries, but employment levels are low. At the same time, SMEs struggle to hire workers (OECD, 2022[3]). Among those young people (15‑29 years) who work, more than 40% are non-regular workers, with low earnings and limited access to social protection.
4.2.2. Older jobseekers
Many older people have low incomes, rely on welfare payments and continue to work to supplement their old-age income. Old-age income poverty in Korea is higher than in any other OECD country, concerning 44% of people over 65, and more than half (55%) of people over 75, far above the OECD averages of 13% and 15%, respectively (OECD, 2021[4]). One of the main reasons for these high figures is the fact that pension entitlements tend to be low, and pension coverage is limited. As a result, Korea is one of only three OECD countries, along with Mexico and Chile, where half of the income of older people comes from work (49% of gross household income), and not pensions (or public transfers) as in most other OECD countries (OECD, 2023[5])
In line with low old-age income, many older people in Korea rely on social assistance. The share of the population receiving benefits under the basic livelihood security system (BLSS), which is a means-tested targeted last-resort programme for poor citizens, is much higher among older Koreans than among prime‑aged people (Figure 4.1). While 2% of 40‑year‑olds and less than 4% of 50‑year‑olds receive BLSS benefits, they are 6.5% of 65‑year‑olds, and 13% of 80‑year‑olds.
Figure 4.1. Many older people rely on welfare payments
Basic Livelihood Security Recipients by age, as a share of the population, August 2023
Source: Bokjiro (2023[6]), 기초생활보장 연령별 수급자수(일반) [Number of recipients of basic livelihood security by age (general)], www.bokjiro.go.kr/ssis-tbu/twatga/sociGuaStat/SociGuaStatDetailIframe.do?datsNo=7&datsClNo=1012&datsClCrit=WS; United Nations (2023[7]), Department of Economic and Social Affairs, Population Division, Data Portal, https://population.un.org/dataportal/home.
4.2.3. People with disabilities
The prevalence of disability is much lower in Korea than in other OECD countries, at 3% of 15‑69 year‑olds against 16% in the OECD (OECD, 2022[8]). This remarkably low rate may be due to better health conditions among the Korean working-age population, but is also driven by methodological aspects, especially the exclusion of mental health issues in the Korean data.
However, among Koreans who are known to have disabilities, labour market opportunities are limited and social conditions are difficult. The employment rate of people with disabilities is very low (25% in 2014), far below the OECD average of 42% in 2019, highlighting the labour market barriers linked to disabilities (Figure 4.2). What is more, Korea is one of only few countries in which employment rates among people with disabilities have fallen since 2008. As a consequence, the average disability poverty gap in Korea (i.e. the gap in poverty rates between people with and without disabilities) stands among the highest within the OECD, hinting to major economic and social challenges (OECD, 2022[8]).
Figure 4.2. Employment rates among people with disabilities are low
Employment rate of people with disabilities
Note: Data cover persons aged 15‑69. Year 2019 or latest refers to 2019 except: 2014 (Korea), 2016 (Mexico), 2017 (Australia, Chile) and 2018 (Belgium, Iceland, Ireland, Italy, the United Kingdom, the United States). OECD is the unweighted average of the 32 countries shown.
Source: OECD (2022[8]), Disability, Work and Inclusion: Mainstreaming in All Policies and Practices, https://doi.org/10.1787/1eaa5e9c-en (Figure 2.5, Panel A).
4.2.4. Women with career breaks
Women with career breaks are typically mothers who interrupt their career for some time to raise a child. Low employment levels of mothers are a strain to the economy because they reduce labour supply while some sectors are starting to face labour shortages, and to mothers who face hurdles to re‑enter the labour market after longer career breaks.
There is evidence that women with children face a motherhood penalty in Korea, reducing the expected wage of mothers compared to women without children by up to almost 10% (Choi, Shin and Ro, 2022[9]; Ihm, 2010[10]). A lack of recent work experience, the perception that mothers would be less productive due to their care responsibilities, discrimination by employers, and a preference by mothers for more accommodating jobs even at the expense of lower wages are all among possible reasons for motherhood penalties (Budig and England, 2001[11]).
4.3. Supporting vulnerable groups
This section discusses and examines ALMPs for groups with vulnerabilities, focusing specifically on the groups discussed in Section 4.2. To this end, the OECD conducted a mapping exercise to classify Korea’s ALMPs into different categories: ALMPs that specifically target young people; ALMPs that specifically target older people; ALMPs that specifically target people with disabilities; ALMPs that specifically target mothers with career breaks; ALMPs that target several vulnerable groups or all jobseekers. The mapping is based on the descriptions of individual ALMPs and aims to provide a rough estimate of the relative importance of different types of ALMPs in Korea. The results of this mapping should not be seen as officially validated data.
According to the mapping, more than half (53%) of ALMP spending in Korea is dedicated to ALMPs that are earmarked to one of the following four groups:
young people, typically with no or little work experience (34%)
older people, including people who are already in retirement age (13%)
people with disabilities (5%)
mothers with career breaks (1%)
The remainder of ALMP expenditures (43%) is either available to all job seekers, to several vulnerable groups simultaneously, or, less commonly, to other vulnerable groups not listed above, such as former prisoners.
Korea’s targeted approach with a strong focus on jobseekers with vulnerabilities is laying the foundation for more equitable access to the labour market, where support is tailored to those who need it most. The approach takes account of the barriers faced by vulnerable groups, highlighting a commitment to more inclusive employment opportunities. Going forward, Korea should continue to ensure that sufficient resources are channelled to ALMPs for the groups that face the largest labour market barriers, as access to tailored and individualised ALMPs is crucial for them to overcome their barriers.
Figure 4.3. More than half of ALMP expenditures is targeted to groups with vulnerabilities in Korea
Active labour market policy (ALMP) spending, by target group, 2021
Source: OECD calculations based on data supplied by the Korean Ministry of Employment and Labor.
4.3.1. ALMPs for young people
The composition of the ALMPs that are earmarked to a specific group varies starkly across groups (Figure 4.4). Seventy-one percent of the spending on ALMPs earmarked to young people is used for recruitment incentives, way ahead of other types of ALMPs, such as start-up incentives (15%) and training (12.4%). What is more, recruitment incentives are rarely used for other types of vulnerable groups, so that the vast majority of all spending on employment incentives (64%) is dedicated to ALMPs for youth.
The biggest recruitment incentive programmes for young people include a subsidy programme for SMEs with a high growth potential (고용창출장려금, 중소기업청년추가고용장려금), which can get subsidies covering the full labour costs of one employee if they hire at least three young jobseekers, as well as a big programme led by local governments (지역주도형청년일자리사업 - 지역정착지원형, 민간취업연계형). The latter aims to encourage young people to work in SMEs in rural areas, by paying subsidies to employers, coupled with counselling and training for the candidates.
Not all of the programmes for young people target only jobseekers, but some are also directed towards high-school students to support them pre‑emptively while they are still enrolled in school, as for example a programme for current and future high-school graduates who wish to get hired by a SME after high-school (고교 취업연계 장려금 지원 사업). Many of the recruitment incentive programmes for young people encourage work of young people with SMEs, which are largely considered as less attractive in Korea’s dual labour market and face labour shortages.
Figure 4.4. Different groups of jobseekers with vulnerabilities have access to different types of ALMPs in Korea
Categories of active labour market policies (ALMPs), depending on target groups, 2021
Note: “All” includes all ALMPs, earmarked or not. NEET: Not in employment, education or training.
Source: OECD calculations based on data supplied by the Korean Ministry of Employment and Labor.
Spending on training for young people is much lower than spending on recruitment incentives, with 5% of spending on ALMPs for young people targeted to institutional training, 1% to workplace training and 6.5% on special support for apprenticeship. Among the biggest training programmes for young people are a training programme for high-school students in their final year and college graduates, and a dual work-study programme. However, participant numbers are much lower than for large recruitment incentive programmes.
Against this background, Korea should focus ALMPs targeted to young people more strongly on training, including workplace training, to enhance their employability. Korea can draw on successful experiences of other OECD countries with ALMPs or initiatives targeted at young people that combine training with other support, including work-study programmes. For example, Austria has implemented a so-called “training guarantee” for young people who have difficulties connecting with the labour market (OECD, 2021[12]). More specifically, young people up to the age of 25 who aspire to enter the nation’s company-based apprenticeship system but face challenges securing a company willing to train them, can turn to the PES for support. After completing a series of initial preparatory courses, they commence their apprenticeships without the need to be employed by a specific company, contrary to what is usually the case for apprenticeships. Participants of the “training guarantee” attend a professional school to cover the theoretical part of their education, just like regular apprentices who are employed by a company. However, unlike the latter, they do not complete the practical part of their apprenticeship in a regular company, but in partner enterprises, educational institutions or vocational schools. The qualifications obtained through both the conventional company-based apprenticeship and the training guarantee pathway are equivalent. Should apprentices who initially began training through the training guarantee subsequently succeed to secure an apprenticeship with a specific company, they retain the option to transition to the standard apprenticeship path.
As of 2020, approximately 7% of all apprentices in Austria were able to start their apprenticeships thanks to the training guarantee (Wieland, 2020[13]). Among them, 72% of those who completed their apprenticeships passed their final examination and obtained a vocational degree, comparing to 86% in the company-based apprenticeship strand. While Korea does not have an apprenticeship system that is as deeply enrooted as Austria’s, the example can nevertheless be an inspiration as to how a sound co‑operation between the PES, partner companies and the educational system can help provide tailored support to young people who struggle to enter the labour market by providing training and other support (in this case practical work experience). Importantly, the programme intervenes at a very early stage of participants’ professional lives, thus helping to avoid the knock-on effects labour market difficulties have on later career prospects.
While the Korean and the Austrian labour market differ, and Austria has historically a stronger culture of apprenticeships and traineeships, Korea could nevertheless benefit from the insights on the success factors of the Austrian experience, focusing on creating partnerships between the Public Employment Service, educational institutions, and businesses to facilitate access to training and employment opportunities for young people. By adopting a model similar to Austria’s “training guarantee”, which could be adapted to the specificities of the Korean context, Korea could offer young individuals who face barriers entering the labour market a comprehensive support system that includes theoretical and practical training.
A further example of targeted support for young people, which could serve as an inspiration for Korea amidst its recent shift towards transforming Employment Centres into Employment Welfare Plus Centres as comprehensive one‑stop-shops, is Finland’s approach. Finland has created one‑stop-shops for young people under 30 which provide training and a wide range of other types of support (Box 4.1). They are open to all youth, including marginalised young people with major employment barriers, and go beyond the services youth can receive in Employment Welfare Plus Centres in Korea. Building on this experience, Korea could create dedicated teams that fully focus on services and ALMPs to youth, including legal and financial guidance and housing services, in addition to employment services.
While Korea could benefit from the insights from Austria and Finland to design new or adapt existing ALMPs for youth, it is noteworthy that Korea already possesses a large number of different programmes for young people (Jones and Beom, 2022[2]). Aiming to avoid overlaps between programmes and prevent confusion among potential participants, Korea should evaluate its ALMPs for youth and streamline the programmes into fewer, highly efficient programmes. This consolidation effort would enable a more focused and coherent approach to youth employment, ensuring that each programme delivers high value and impact.
Box 4.1. Ohjaamo One‑Stop-Shops for young people in Finland
Ohjaamo one‑stop-shops in Finland have emerged as an innovative and effective approach to supporting young people under 30 in need of help as they progress towards employment, education, and personal development. Ohjaamo offer a combination of training, employment support and other types of assistance, depending on the specific needs of individuals. They are located in around 70 locations all around the country and serve as important resources for Finnish youth, aiming to offer a comprehensive range of services and guidance.
The services of the centres, which are open to young people even without an appointment and without pre‑conditions, are tailored to the needs of youth and include the following:
Education and Career Guidance
Employment Services
Social and Health Services
Housing services
Legal and Financial Guidance
As such, they host many different staff, including study advisers, vocational guidance psychologists, social workers, job counsellors, physical education counsellors, financial counsellors, and many more.
Initially, from 2014 to 2018, Finland conducted a pilot project to evaluate the effectiveness of Ohjaamo centres. Encouraged by the positive outcomes, this approach has since been fully implemented on a national scale.
One of the key factors of Ohjaamo is their accessibility. They are strategically situated and open to all young people, regardless of their personal background or economic circumstances. This high degree of inclusivity, couple with recreational activities in the centres, encourages young people to enter the centres and benefit from their services. The Ohjaamo model actively engages its young clients in the organisation of these centres, thereby fostering an informal and inviting atmosphere.
In addition, the multidisciplinary approach of Ohjaamo makes the centres attractive. By co-locating a wide range of services, the centres address the multifaceted needs of young people, fostering holistic and comprehensive support.
More specifically, the Ohjaamo centres have four primary objectives in their efforts to enhance young people’s access to employment:
Enhancing Job Search Skills: Ohjaamo centres provide counselling services and collaborate closely with educational institutions and public employment services at both the national and local levels. They are the initial point of contact for young jobseekers, referring them to institutions that provide tailored skill development services. Through these collaborations, Ohjaamo centres can even participate in designing new skills development services, such as training programmes, customised to the specific needs of young individuals.
Bridging the Gap between Young Jobseekers and Employers: Ohjaamo Centres organise recruitment events that offer job search support services and facilitate connections between young jobseekers and potential employers. In addition to direct engagement with employers, Ohjaamo Centres can establish partnerships with recruitment agencies that have an existing pool of employers and job vacancies. This widens the spectrum of job opportunities available to young people, including short-term contracts enabling them to showcase their skills.
Creating Employment Opportunities and New Job Openings: Ohjaamo Centres have the capability to directly offer summer jobs to young individuals. They can also assist them in gaining experience using municipal funding and hiring grants. Furthermore, one‑stop shops proactively promote job creation by presenting young people with opportunities that may not have been publicly advertised or encouraging them to submit unsolicited job applications.
Enhancing Employers’ Capacity to Generate Job Opportunities: In some instances, the shortage of job opportunities for young people can be attributed to employers. Ohjaamo centres support employers in boosting their capacity to provide jobs to young individuals. This may involve assisting them in fine‑tuning their communication strategies to effectively engage with and reach out to young jobseekers.
Source: Dromundo, Lüske and Tuccio (2023[14]), Innovative approaches to tackle long-term unemployment, https://doi.org/10.1787/e1f7e16e-en; Pitkänen and Kesä (2018[15]), The methods of promoting youth employment at the One‑Stop Guidance Centers, in One‑Stop Guidance Center (Ohjaamo) – Ready to offer multi‑agency services for the young; OECD (2021[12]), Improving the Provision of Active Labour Market Policies in Estonia, https://doi.org/10.1787/31f72c5b-en; City of Tampere (2023[16]), Ohjaamo One‑stop guidance centre, www.tampere.fi/en/organisation/ohjaamo-one‑stop-guidance-centre.
4.3.2. ALMPs for older workers
The composition of the basket of ALMPs that are earmarked to older jobseekers and older workers in Korea is entirely different to that for young people. The vast majority (98.4%) of spending on ALMPs for older people is dedicated to direct job creation, with the small remainder going to placement services (1.6%). The single most important type of programme for older people, called “Support for Senior Employment and Social Activities” (노인일자리 및 사회활동 지원 - 재능활동형, 재능활동형외사업), has an annual participant inflow of over 821 000 people (in 2021) and accounts for 9.3% of Korea’s entire ALMP spending. It encompasses direct job creation initiatives by a number of different implementing organisations for people aged 60+ or 65+, depending on the exact programme. Implementing organisations can be local governments, the Korean Senior Citizen Association, senior welfare centres and other organisations working with seniors, which hire older workers and supervise their work. The Ministry of Employment and Labour pays subsidies covering parts of the labour cost. Under “Support for Senior Employment and Social Activities” programmes, older workers can hold a variety of positions, ranging from care activities for children to running a small for-profit business or working in a private company.
ALMPs specifically targeting older jobseekers exist in other OECD countries too, but they are less widespread than in Korea. More commonly, older jobseekers participate in ALMPs that are open to all age groups. Typical ALMPs catering to the needs of older jobseekers include wage subsidies, direct job creation programmes and training. According to a survey among European countries, PES frequently consider wage subsidies and start-up incentives to be effective approaches to assist older jobseekers (European Network of Public Employment Services, 2019[17]). A recent meta‑analysis of ALMPs for unemployed people aged 50+ in different OECD countries indicates that the effects on job chances vary across type of policy. While training programmes, either alone or coupled with job search assistance and counselling, are found to have a significant positive effect on labour market outcomes, direct job creation programmes negatively affect the probability of older jobseekers to enter employment later on (Orfao and Malo, 2023[18]).
To enhance the effectiveness of its ALMPs for older people, Korea could consider strategic shifts inspired by international best practices. Notably, Korea could envisage transitioning from primarily direct job creation towards more comprehensive skill development and retraining programmes for older workers, including approaches to increase digital literacy and update outdated skill sets. This could include training programmes, and combinations of direct job creation with training. Emphasising lifelong learning and upskilling can help older workers stay in-demand in the labour market (OECD, 2023[19]).
Korea stands out among countries not only by channelling a large share of its ALMP expenditures specifically to older jobseekers, but also by focusing on people just below or even above retirement age. In most other countries, programmes for older jobseekers are open to people aged 50+ or 55+, rather than 60+ or 65+, as is the case for some of the major programmes in Korea. In this context, it will be important for Korea to precisely define the primary objectives of its ALMPs for older people, and to evaluate whether the objectives are attained. Typically, the sustained long-term integration in the primary labour market is among the central goals of most ALMPs, but this objective is unlikely to be realistic for participants in retirement age. Instead, other objectives can play a bigger role, such as preventing old-age poverty against the backdrop of low pension coverage, and contributing to social inclusion of older people.
In Ireland, many of the participants in its biggest direct job creation programme, Community Employment, are older jobseekers. The programme has a double objective, aiming on the one hand to activate participants and connect them with stable employment and on the other hand to improve their social inclusion. According to a recent evaluation, the programme performs only moderately well in connecting older participants with employment, much less so than younger age‑groups, but there is some evidence that it could improve older participants’ social outcomes, including health outcomes (as measured by disability benefit receipt) (OECD/Department of Social Protection, Ireland/EC-JRC, 2024[20]). In addition to defining the precise objectives of ALMPs for older workers, Korea should implement in-depth evaluations going beyond pure labour effects, put also including social outcomes, to ensure that the large programmes for older individuals achieve their goals. This is also the case for ALMPs for people who are already in retirement age, where the objective might be to increase social integration and prevent poverty rather than achieving a long-term integration in the labour market.
4.3.3. ALMPs for people with disabilities
Korea is among the group of OECD countries in which spending on ALMPs for people with disabilities is relatively low (see Chapter 1). In 2021, Korea spent 0.04% of its GDP on sheltered and supported employment and rehabilitation, against 0.1% on average in the OECD, suggesting that there would be some leeway for more spending if necessary. About two‑thirds of OECD countries have relatively limited spending on sheltered and supported employment and rehabilitation, with levels similar or lower to those in Korea, while the remaining third spends much more on this type of support, with up to 0.9% of GDP in Denmark.
Most of the spending on ALMPs for people with disabilities in Korea finances wage subsidies as well as sheltered and supported employment to address the special needs of this group of jobseekers. This type of support includes employment subsidies paid to companies that hire people with disabilities, the provision of special material or devices that might be necessary to accommodate the needs of this group, as well as training tailored to the needs of people with partly severe disabilities. The biggest programmes include a subsidy programme for employers hiring more people with disabilities than required by law (2.9% for private companies and 3.2% for public enterprises), as well as a programme that places and trains people with severe disabilities at the workplace prior to employment.
The ALMPs on offer for people with disabilities in Korea are overall promising and in line with the needs of this group of jobseekers. However, considering the challenging labour market and social situation of many people with disabilities (see 4.2.3), stronger efforts to reach this group could prove worthwhile. Employment Welfare Plus Centres could build up new partnerships with NGOs catering to people with disabilities and actively reach out to them, informing about the services and measures that are available to address labour market barriers and social difficulties.
In addition, Korea could take steps to reinforce work accommodation, including graded work (part-time sick leave) for people who worked but left their job due to sickness or disability. A high degree of work accommodation (which can be a change in work task, teleworking or other measures to accommodate a person with a disability) is a very effective tool to increase returns to work, and usually does not involve high costs. Therefore, Korea should ensure that work accommodations are widely accessible. This can be achieved, for example, by establishing legal rights to flexible work schedules for people with disabilities, part-time employment, or the option to work remotely (OECD, 2023[21]).
4.3.4. ALMPs for women with career breaks
The basket of ALMPs earmarked to women with career breaks is more balanced than for other groups with vulnerabilities. More specifically, 39% of the spending is dedicated to placement and related services, 21% to institutional training, 29% to recruitment incentives and 12% to direct job creation (Figure 4.4). The stronger focus on placement services, which is often less costly than other types of ALMPs, explains why spending on ALMPs for women with career breaks is comparatively low compared to other groups, even though participant numbers are not.
The most widespread placement services for women with career breaks are delivered by the New Job Centres for Women, which provide e.g. job counselling tailored to the specific situation of women with children. As the New Job Centres for Women are supervised by the Ministry of Gender Equality and Family (MGEF), many of the ALMPs for mothers are designed by MGEF rather than MOEL. The balanced ALMP offer for women with career breaks provides good opportunities for women to overcome their employment barriers due to a combination of placement services, institutional training, and recruitment incentives. However, despite this balanced approach, mothers still face significant barriers that hinder their full integration into the workforce. Challenges such as difficulties in re‑entering the labour market after longer career breaks persist. Therefore, Korea could assess the need for further support by mothers with career breaks, e.g. using surveys among clients of New Job Centres for Women, and extend to share of funding earmarked to this group of jobseekers, without necessarily the composition of the ALMP offer for women.
4.3.5. Key lessons from other OECD countries to support vulnerable groups
OECD countries have designed a wide range of initiatives tailored to vulnerable groups and the long-term unemployed. These programmes, many of which benefit from years of experience and innovation, can offer valuable insights for Korea to enhance or complement the ALMPs for vulnerable groups that are currently on offer. By harnessing the lessons learned from other countries, it can be possible to identify programmes or parts of programmes that have proven successful elsewhere and adapt them to the Korean context, thereby forging more effective and inclusive pathways to employment and social inclusion.
ALMPs designed to support the labour market inclusion of vulnerable groups with weak attachments to employment often entail a tailored combination of strategies. For example, subsidised employment within the social economy can be a step towards workforce integration but should be complemented with simultaneous training and mentoring efforts to facilitate the long-term integration into the primary labour market (OECD, 2021[1]). More generally, in order to be as effective as possible, support for vulnerable groups should be provided in an integrated way, addressing multiple employment barriers at the same time, and be well aligned with jobseekers’ individual needs (Dromundo, Lüske and Tuccio, 2023[14]).
For example, Spain introduced an innovative approach to connect jobseekers with vulnerabilities and long‑term unemployed people with jobs. This approach, called “Lanzaderas” (“Launching Pads”), is based on a unique combination of community-based support and professional development. Lanzaderas bring together jobseekers with diverse personal backgrounds who build small heterogeneous groups to foster mutual support and collaboration. Lanzaderas are a relatively long programme, lasting typically for six months, which leaves sufficient time for participants to develop a daily routine (i.e. being on time for the activities), create synergies within the group based on mutual trust among participants, and strengthen one’s self-esteem (Dromundo, Lüske and Tuccio, 2023[14]).
Within the Lanzaderas programme, participants benefit from some individual counselling, but mostly from collective support and group activities. Group activities are very varied and include activities to build up fundamental skills (e.g. team work), job-related specific competencies and interacting with potential employers. These activities are supervised by a job coach, but largely implemented by programme participants themselves to foster their proactivity. They aim to equip participants with essential job search skills, interview techniques, and self-presentation strategies.
What sets Lanzaderas apart is its emphasis on fostering a sense of belonging and empowerment within the groups, helping participants build confidence and resilience and benefiting from the experience of other participants. This innovative approach has proven to be a successful model for addressing unemployment challenges in Spain and has the potential to serve as an inspiration for other countries grappling with similar issues. Due to its success, the programme has been implemented hundreds of times throughout Spain over the last decade, and has been adopted in other European countries as well (Dromundo, Lüske and Tuccio, 2023[14]).
Spain is far from being the only country with promising approaches to connect vulnerable job seekers with employment. Other countries, such as Austria, have introduced other approaches for vulnerable groups that have turned to perform well and could be a source of inspiration for Korea (Box 4.2)
Box 4.2. Austria involves employers to train vulnerable job seekers directly in companies
Austria’s follows a unique approach, called In-placement Foundations, which involves employers in training long-term unemployed individuals, addressing simultaneously both labour shortages and unemployment. Established in the early 2000s, In-placement foundations connect employers facing recruitment challenges with jobseekers who current lack specific job skills but are willing and able to build up such competencies through tailored training. They particularly target vulnerable groups, such as those with low education levels or at high risk of long-term unemployment (Dromundo, Lüske and Tuccio, 2023[14]; Waldner, 2022[22]).
In-placement foundations are initiated when a company faces recruitment difficulties and reaches out to the PES, but no suitable candidate is registered with the PES. In such cases, the PES and employers jointly identify vulnerable job seekers who do not fulfil the requirements for the position at the moment, but could acquire the skills and competencies needed. Once identified, the candidate is trained by the employer on a long-term basis directly within the company, and develops skills and competencies in line with the employer’s needs.
In-placement foundations are jointly funded by employers, the PES, and provincial governments. For example, in some cases employers cover EUR 500/month and participant, with the rest of the cost stemming from public funding. In-placement foundations are long-term projects, involving the development of an integration concept at the start of the process, identifying suitable candidates, and providing training lasting up to three years (AMS, 2021[23]).
In-placement foundations are successful. For example, among those who participated in the programme in 2019, more than one‑third secured employment right after finishing the programme, and within one year, about two‑thirds were employed (BMASK, 2021[24]).
4.4. Conclusion
Korea dedicates a large share of its ALMP spending to vulnerable groups, reflecting efforts to channel resources to people who are most in need of support. Especially youth, older jobseekers, people with disabilities and mothers with career breaks are among the groups facing substantial labour market barriers.
There is a large ALMP offer for youth and older people, but ALMPs for youth focus largely on employment subsidies and ALMPs targeted to older people on direct job creation programmes. In both cases, channelling more funds towards training would be worthwhile.
The ALMP offer for people with disabilities is in line with their needs, but additional efforts to reach inactive people with disabilities could help improve their persistently challenging situation. Mothers with career breaks have access to a diversified ALMP portfolio, but only a small share of ALMP spending is channelled to this group, suggesting that earmarking more funding to support this group of jobseekers could prove beneficial.
More generally, Korea could benefit from introducing innovative ALMPs to help vulnerable groups of jobseekers that have shown to be effective in other countries, including programmes with a strong involvement of employers as in Austria and approaches relying on strong group dynamics as in Spain.
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