Many nations are dealing with mounting challenges in sustaining a sturdy labor power, notably for employees who’ve confronted a number of layoffs or different employment points.
Korea is not any exception. Since 1995, the nation has operated an unemployment advantages system that gives as much as 60 p.c of a employee’s common wages from their remaining three months of employment. The system affords short-term monetary assist and facilitates the transition again into the workforce.
For 33-year-old Choi, the advantages got here at a crucial time. After his employer delayed paying wages for months, he stop and started on the lookout for different alternatives. Throughout that interval, unemployment advantages proved to be important, offering roughly 2 million gained ($1,378) per thirty days for six months.
“The advantages allowed me to take my time and put together rigorously for my subsequent transfer,” he mentioned.
However the price of that security web is swelling. Payouts are reaching document ranges as Korea contends with a sluggish job market, exacerbated by a protracted financial downturn and a quickly getting older inhabitants.
Unemployment advantages disbursed in September totaled about 1.1 trillion gained, up 10.9 p.c from a 12 months earlier, in keeping with the Ministry of Employment and Labor.
That is the eighth straight month that month-to-month funds have topped 1 trillion gained — the longest run on document. The earlier peak was a seven-month streak throughout the COVID-19 pandemic in 2021.
A shrinking pool of high quality jobs and a polarized labor market are weighing closely on employment dynamics, the Korea Growth Institute mentioned in a report launched Thursday.
System below scrutiny
The federal government is boosting welfare spending to spur employment. However critics say the system is unintentionally fueling dependency and widening inequality — issues which have drawn elevated consideration in latest months.
“Beneficiant unemployment advantages present monetary stability for job seekers, however in addition they carry the chance of encouraging ethical hazard,” the Pi-Contact Institute mentioned in a March report.
A job seeker fills out a resume at a job honest in Daejeon, Tuesday. Yonhap
The assume tank famous that this 12 months’s minimal month-to-month unemployment good thing about 1.89 million gained outpaces the take-home pay of a full-time minimal wage employee incomes 1.84 million gained for 209 hours per thirty days.
“This revenue reversal, the place the unemployed obtain greater than full-time minimal wage earners, is each uncommon and alarming. Korea is the one OECD nation the place this sort of distortion exists,” it added.
There’s additionally no restrict on repeat claims, so long as the applicant has no less than 180 days of employment insurance coverage protection throughout the earlier 18 months.
Repeat recipients — those that claimed advantages three or extra instances in 5 years — rose from 100,491 in 2021 to 112,823 in 2024.
That imbalance is fueling public criticism — and fraud.
In September, recipients from Daejeon had been caught vacationing overseas whereas falsely claiming advantages by reporting lively job searches in Korea. On-line platforms like YouTube brazenly share recommendations on the way to stop rapidly and nonetheless qualify.
As of August, fraudulent claims totaled 23 billion gained throughout 17,246 circumstances, with solely 66.3 p.c of funds recovered. The overall worth of such claims has trended upward, from 28.2 billion gained in 2021 to 32.2 billion this 12 months.
Different superior economies implement stricter guidelines to stop such incidents, with longer work necessities and harsher penalties for fraud, consultants say. Korea might have to think about related mechanisms because it balances labor protections with fiscal sustainability.
“With the unemployment profit approval fee reaching as excessive as 99.7 p.c, the system is successfully structured so that almost anybody who applies is deemed eligible,” mentioned Korea Enterprises Federation.
“Reforms are wanted, corresponding to decreasing the excessively excessive minimal profit degree and lowering payouts for repeat recipients, to ascertain a extra rational and incentive-based framework,” it added, suggesting extending the reference interval from 18 to 24 months, and the required contribution interval from 180 days to 12 months.
