South Korean President Moon Jae-in has stated that his government are in the planning phase for laying the foundation for a universal employment insurance system to cover all workers. In his special address on 10 May, President Moon said that the government would expand employment insurance coverage in phases to all workers.
“South Korea operates four state-managed social insurance programs. They are the national pension, health insurance, industrial accident compensation insurance and employment insurance. Subscribers to the employment insurance plan pay a certain amount of premiums, and they are entitled to an unemployment allowance when they lose their jobs. While health insurance covers all citizens, employment insurance does not. In fact, many workers are in a “blind spot” in the job insurance system,” said Lee In-chul, director of the Real Good Economic Institute.
This new employment insurance plan is designed to provide unemployment benefits to jobless people and support their job training. If the insurance is expanded to cover the entire economically active population, all workers can receive unemployment benefits in the case that they are out of work.
The current employment insurance does not cover self-employed people, workers in special employment such as insurance planners and tutors, platform workers like delivery-app couriers and drivers of car-sharing services, as well as freelancers and artists.
Despite suffering from the devastating damage brought about by the COVID-19 pandemic, about half of the employed population in South Korea still lies within the blind spot in the employment insurance system. The planned universal employment insurance scheme seeks to have more workers insured against unemployment by extending the employment safety net.
For stable employment, all workers should be covered by the insurance system. However, the fiscal burden is a major problem to resolve. In the aftermath of the COVID-19 epidemic, many workers have lost their jobs. As a result, nearly 1 trillion won (US$820 million) was paid out in unemployment benefits in April. The new subscriptions of the self-employed, those in special employment and non-regular workers who have a higher risk of unemployment will aggravate the deficit of the fund that has already been struggling.
As a role model, South Korea is looking at other countries who were once in similar situations. One such country is France. Previously, employers and workers in France paid the premiums for the employment insurance together in a program similar to South Korea. But the system was abolished in 2018. Now, only employers contribute to the employment insurance plan, and social security contributions are used to substitute for employees’ payments.
As COVID-19 continues to be a thorn in the side of global business and employment, nations are working hard to resolve the ensuing job crisis. South Korea has presented an ambitious vision of a universal employment insurance plan. However, it will still be necessary to continue the search for innovative and proper solutions to give concrete shape to job protection measures.