employment insurance scheme of korea · premiums, etc. of employment insurance and industrial...
TRANSCRIPT
Employment Insurance Scheme of Korea
Dr. Sang Hyon Lee Korea Employment Information Service
2016
Contents
Conclusion
EI Programs
EI Benefits
EI coverage and finance
Introduction of EI in Korea
Job Matching Service Vocational Counseling, Skill Development, Youth Employment Subsidy, Internship
University Job center, Job Success Package Program <All provide by Employment Insurance>
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10000
15000
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25000
30000
Per Capita GDP
Unemploymentrate
Growth of GDP per capita of Korea
Migration Mine Worker and Nurse
Vietnam War
OIL Shock
Middle east Construction
Asian Monetary
Crisis
Global Economic
Crisis
Korean War
Introduction EI
Engine of Economic Growth of Korea
Investment of Skill Development and Education Unlimited supply of well educated human resources - 78% of high school graduate entering university - 99.9% graduate high school No high school dropout - 2015 Students in USA China 331,371, India 146,336, Korea 87,384 - PISA among OECD countries Reading 1~2 / Math 1 / Science 2~4
Hard lessons from the Crisis
- Flexible Labor Market is important for competition - Labor Market Mismatching is issues - ALMP is key player Job Matching Services & Individual Case Management Labor Market Information & Employment forecasting Career Guidance Skill Development - 2006 changed the title of Ministry of Labor to Ministry of Employment and Labor
The purpose of employment insurance is to seek ① to prevent unemployment ② promote employment ③ develop and improve the vocational skills of workers, ④ to strengthen the nation’s vocational guidance ⑤ job placement capacity and to stabilize the livelihood of workers ⑥ promote their job-seeking activities by granting necessary benefits when they are out of work, thereby contributing to the economic and social development of the nation.
Employment Insurance Act, Article 1
- Maintain standard of living for the unemployed - Social justice for vulnerable groups in the turbulent economy - Provide time to find new jobs - Assistant unemployed workers find jobs - Stabilize economy during recession, bigger economy by providing money to spend for the unemployed - Decrease social costs of unemployment - Promote better utilization of labor force - Encourage employers to stabilize employment - Help employers maintain a skilled work force Give a chance to develop employment services and vocational
training delivery system
Objectives and Effects of EI
MOEL
Job Center Operation
COMWEL Application Collection
Qualification
KEIS IT system Evaluation Analysis
Social Insurance Agency
Institutional Setup for EI
10
Introduction of Employment Insurance
- The Employment Insurance (EI) System of Korea was introduced on July 1, 1995 to prevent joblessness, promote employment and improve workers' vocational skills. In early 1990s : Employment Insurance(EI) - Employment Insurance Research Commission (EIRC) - EI Law passed December 1, 1993 Several Issues over EI introduction - Types of Social Safety Net (SSN) of the Unemployed - Unemployment Insurance(UI) or Employment Insurance(EI) - Coverage - Vocational Skill Development Program and the In-plant Training Levy - UB and the Legal Severance Payment System - Administration Body - Financing of EI administration
Unemployment
Benefit
Employment Stabilization Program
& Job Skill Development Program
From July 1, 1995 30 employees or more 70 employees or more
From January 1, 1998 10 employees or more 50 employees or more
From March 1, 1998 5 employees or more 50 employees or more
From July 1, 1998 5 employees or more 5 employees or more
From October 1, 1998 1 employee or more 1 employee or more
Coverage of Employment Insurance
- Unincorporated businesses with four or fewer ordinarily employed workers in the agricultural, forestry, fishing or hunting industries - Construction work carried out by those other than housing constructors, whose total cost is less than 20 million KRW or which is undertaken to construct a building with a total floor area of 100m2 or less or renovate a building with a total floor area of 200m2 or less - Domestic service - Those who are employed or starts up their own businesses after the age of 65 or over (except for employment security and vocational skills development programs) - Those whose monthly working hours are less than 60 hours (including those whose weekly working hours are less than 15 hours) - Public officials and those subject to the Private School Teachers Pension Act (Optional coverage for special public officials) - Special postal workers
Businesses and workers excluded from coverage
Coverage of Employment Insurance
13
EI coverage for the self-employed
- Amendments to the Employment Insurance Act and the Act on the Collection of Premiums, etc. of Employment Insurance and Industrial Accident Compensation Insurance, which would allow self-employed people to opt into the unemployment benefit program, were passed at the National Assembly, and the EI (unemployment benefits) for self-employed people took effect on January 22, 2012.
Business Insured
Total Created Loss Total Gender
Acquisition Loss Male Female
2004 1,002,638 472,190 310,418 7,481,618 4,957,284 2,524,334 3,734,937 3,334,909
2005 1,148,474 607,766 417,033 7,965,597 5,241,103 2,724,494 4,232,228 3,685,378
2006 1,176,462 689,734 659,593 8,436,408 5,510,717 2,925,691 4,397,632 3,860,139
2007 1,288,138 778,967 652,456 8,941,639 5,773,949 3,167,690 4,609,512 4,025,285
2008 1,424,330 874,199 757,317 9,271,701 5,936,950 3,334,751 4,802,266 4,409,950
2009 1,385,298 826,907 880,930 9,653,678 6,083,853 3,569,825 5,177,050 4,722,915
2010 1,408,061 811,231 807,487 10,131,058 6,310,423 3,820,635 5,601,393 5,112,336
2011 1,508,669 874,443 803,536 10,675,437 6,569,800 4,105,637 5,946,960 5,392,169
2012 1,610,713 957,420 891,161 11,152,354 6,784,700 4,367,654 6,045,986 5,590,642
2013 1,747,928 975,724 872,901 11,571,213 6,971,699 4,599,514 6,075,728 5,616,445
Total Population 50,000,000, No of Employed 25,979,000, No of Unemployed 912,000
Employment Insurance Coverage
- EI premium rates are divided into the rate for employment security and vocational skills development programs and the rate for unemployment benefits. - In July 2013, the rate for unemployment benefits was raised from 1.10% (0.55%, each from employer and employee) to 1.30% (0.65% each from employer and employee).
Premium rates
Financing of Employment Insurance
EI Programs and Size of Enterprises Total Employer Employee
UB, Maternity & Parental Leave Benefit 1.30 0.65 0.65
ESP
and
SDP
Less than 150 employees 0.25 0.25 -
SMEs with more than 150 employees 0.45 0.45 -
More than 150 and less than 1,000 employees 0.65 0.65 -
More than 1,000 employees 0.85 0.85 -
Note: SMEs means that firms with 300 employees or less in mining, transportation, warehousing, communication, construction industries and firms with 500 employees or less in manufacturing industry, and firms with 100 employees or less in other industries.
Financing of Employment Insurance
Contribution for insurance premium : flat rate 1.30%
2013 2014
Income 9,541,136 11,291,046
Expenditure
Employment Policy 4,244,996 4,520,566
Skill Development 1,340,463 1,458,823
Employment Equality 866,337 958,608
Disability Employment Promotion 3,000 2,850
Administration 104,342 107,299
Reservation Fund 2,981,998 4,242,900
Expenditure Total 9,541,136 1,1291,046
Income and Expenditure of Employment Insurance
(MKRW)
1) The claimant's insured employment period should be at least 180 days out of the 18-month base period before the day of job loss.
2) The claimant must register at the public employment office as a job seeker.
3) The claimant is out of work but remains willing to and able to work, and is actively seeking new employment.
4) Determination of fault in job separation process 1. voluntary separations without good cause 2. discharges for employee misconduct
Initial Eligibility for JSA
Eligibility for Job Seeking Allowance
Continuous Eligibility for JSA 1) The claimant's need to report job search activity 1-4 weeks, Active job search
requirement is the stipulation with fuzzy
2) Able and available for work
1) A claimant who voluntarily leaves his/her job without good cause is disqualified from JSA. “Good cause” includes health conditions, working conditions, employment terms, managerial situation in the company or other similar circumstances.
2) A claimant who lost his/her job owing to serious misconduct on the job is disqualified from JSA.
3) If a claimant has refused, without good cause, to apply for suitable employment or refused job placement services offered by the public employment office, he/she is to be suspended from receiving JSA for two weeks.
4) If a claimant has, without good cause, refused or failed for a reasonable opportunity to receive vocational training suggested by the public employment office, JSA is suspended for four weeks.
Restrictions on JSA
Eligibility for Job Seeking Allowance
Insured Employment Period
Less than 1 year 1-3 years 3-5 years 5-10 years 10 years or
more
Age
Less than 30 years 90 90 90 150 180
30-50 years 90 120 150 180 210
50 years or older, or disabled 120 150 180 210 240
(Unit: days)
Waiting period of JSA : 7 days
Duration of JSA
Duration of Job Seeking Allowance
0
10
20
30
40
50
60
70
Maximum benefit durations for a 40-year-old
Source : OECD Tax-Benefit Models, www.oecd.org/els/social/workincentives
Training Extended Benefit When a claimant receives vocational training, as ordered by the PES office, the duration of JSA can be extended up to 2 years for the training period. The daily amount of the Training Extended Benefit is equal to JSA.
Individual Extended Benefit When the PES office recognizes that it is extremely difficult for a claimant to be reemployed within a short period of time, and the claimant has difficulties in maintaining livelihood, the duration of JSA can be extended up to 60 days. The daily amount of the Individual Extended Benefit is 70 percent of JSA.
Special Extended Benefit Special Extended Benefit is enforced only when the unemployment rate of the last three months is very high (greater than 6.0%). The duration of JSA for all claimants is extended for 60 days during the specified period. The daily amount of the Special Extended Benefit is 70 percent of JSA.
Extension of JSA
Duration of Job Seeking Allowance
Replacement Rate of JSA : - 50% of the previous average wage - Benefit ceiling : Maximum benefit rate of 43,416 KRW(1. 2016) (35 USD)/Day - Minimum benefit rate : 43,416 KRW, 90 % of the hourly minimum wage(6,030KRW/hr) - Minimum wage rapidly increased and eventually have same amount with maximum benefit 1995 30,000 Maximum, 1,170 KRW HMW
Amount of Job Seeking Allowance
0
10
20
30
40
50
60
70
80
90
100
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Net replacement rate - Initial unemployment
Source : OECD Tax-Benefit Models, www.oecd.org/els/social/workincentives
The ERA is a bonus system to encourage JSA claimants’ speedy re-employment in stable jobs.
The amount of ERA is 50% of the claimant's remaining amount of JSA. (For those whose age are 55 or older and for the handicapped persons, the amount of ERA is 2/3 of the claimant's remaining amount of JSA.)
1) The claimant must find new job before his/her remaining duration of JSA is shorter than 30 days.
2) The claimant must be reemployed in the new job for more than six months.
3) The new job must not be related with the previous employer or anyone closely related to the previous employer.
4) The claimant must not have received ERA during the recent two years prior to the first day of new employment.
1) Early Re-employment Allowance (ERA)
Employment Promotion Allowance
The VTPA is a supplement to JSA to facilitate taking vocational training of JSA recipients.
The NJSA assists extensive nationwide job search efforts of JSA recipients by subsidizing transportation and lodging costs for job interviews.
The MA subsidizes the moving costs incurred during relocation for new employment or vocational training.
2) Vocational Training Promotion Allowance (VTPA)
3) Nationwide Job-seeking Allowance (NJSA)
4) Moving Allowance (MA)
Employment Promotion Allowance
The ERA is a bonus system to encourage JSA claimants’ speedy re-employment in stable jobs.
The amount of ERA is 50% of the claimant's remaining amount of JSA. (For those whose age are 55 or older and for the handicapped persons, the amount of ERA is 2/3 of the claimant's remaining amount of JSA.)
1) The claimant must find new job before his/her remaining duration of JSA is shorter than 30 days.
2) The claimant must be reemployed in the new job for more than six months.
3) The new job must not be related with the previous employer or anyone closely related to the previous employer.
4) The claimant must not have received ERA during the recent two years prior to the first day of new employment.
5) Early Re-employment Allowance (ERA)
Employment Promotion Allowance
(MKRW)
Applied EI Benefit
Total JSA ERB Sick Leave
Qualified No Payment No Payment No Payment No Payment
2004 471,542 467,730 707,432 1,448,306 619,420 1,327,384 81,419 114,859 6,340 6,025
2005 565,753 562,524 812,768 1,751,974 706,645 1,602,875 99,925 143,209 5,801 5,839
2006 612,667 609,691 943,542 2,074,004 816,692 1,834,039 121,232 234,116 5,179 5,785
2007 687,765 685,024 1,009,180 2,434,032 855,749 2,117,168 147,688 310,475 5,307 6,326
2008 838,783 835,140 1,162,534 2,865,256 981,985 2,466,521 174,403 391,613 5,436 6,867
2009 1,073,989 1,068,389 1,528,407 4,116,404 1,299,567 3,589,872 221,389 517,083 6,585 8,921
2010 978,575 973,026 1,336,439 3,686,530 1,236,985 3,477,987 91,864 198,663 6,864 9,386
2011 906,422 902,362 1,278,106 3,561,353 1,163,732 3,337,080 107,472 214,555 6,353 9,296
2012 901,588 898,054 1,267,427 3,676,666 1,146,106 3,431,424 114,006 234,374 6,816 10,429
2013 922,401 919,118 1,290,686 3,883,507 1,162,387 3,611,415 120,486 259,631 7,349 11,991
Job Seeking Allowance
(MKRW)
Job Seeking Allowance
2011 2012 No Amount No Amount
Early Reemployment Allowance
107,471 214,555 114,006 234,374
Skill Development Allowance
14 4 12 5
Nation Wide Job Searching Allowance
23 1 9 0.4
Moving Allowance 226 203 212 255 Training Extended Benefit
23 77 19 70
Individual Extended Benefit 2,671 4,066 1,575 2,496
31
- Employment Creation Assistance - Employment Adjustment Assistance - Regional Employment Stimulation Grants - Employment Promotion Assistance - Labor Market Information and Job Placement Service
- The employment security program is in place to guarantee job security for workers in response to technological advances and the changing industrial structure while providing reasonable support to employers' efforts for employment adjustment. Unlike unemployment benefits, this program is an active labor market policy to cope actively with changing labor market conditions.
Employment Security Programs
32
Employer subsidies ’12 ’13 Plan ’14 Plan
• Employment Adjustment Subsidy 33,643 53,243 49,998 • Employment Stimulation Subsidy 47,892 39,057 30,487 • Employment Creation subsidy 22,091 47,662 113,203 • Employment Security Subsidy 15,024 11,414 1,000 • Construction worker subsidy 17,033 21,885 14,283 • SME Youth Internship 63,082 87,385 108,441 • Occupational Information 5,805 6,024 5,941 • Labor market information 2,867 3,566 2,962 • Employment Projection 1,286 1,286 1,566 • Employment Systems 27,589 37,957 30,379
Employment Security Programs
(MKRW)
1) Parental Leave Benefit
Parental Leave Benefit, 50% of wage, is paid for workers who temporarily leave their jobs to take care of children aged one or under.
To the employers, the Grant for Child Care Leave is awarded to employers who have granted such a leave for more than 30 days.
2) Maternity Leave Benefit The salary during the maternity leave (90 days) is paid for 90 days for employees in SMEs and 30 days for employees in large companies as a Maternity Leave Benefit.
The maximum amount is 1,350 thousand won per month and the minimum is equivalent to minimum wage.
Parental and Maternity Leave Benefit
Parental Leave Benefit
Number Amount
(MKRW) Benefit/M
2003 6,816 10,576 300 USD 2004 9,303 20,803 400 USD 2005 10,700 28,242 400 USD 2006 13,670 34,521 400 USD 2007 21,185 60,989 500 USD 2008 29,145 98,431 500 USD 2009 35,400 139,724 500 USD 2010 41,732 178,121 500 USD 2011 58,134 276,261 40% wage 2012 64,069 357,798 40% wage 2013 69,616 420,248 40% wage 2014 76,833 500,663 40% wage
Maternity Leave Benefit
(MKRW)
No Amount 2003 32,133 33,522 2004 38,541 41,610 2005 41,104 46,041 2006 48,972 90,886 2007 58,368 132,412 2008 68,526 166,631 2009 70,560 178,477 2010 75,742 192,564 2011 90,290 232,915 2012 93,394 241,900 2013 90,507 235,105 2014 88,765 236,845
Asian financial crisis in late 1997 gave an opportunity to develop PES to overcome high unemployment (3→ 8%)
Increased the number of vocational counselors of Job Centers : 80(1996) → 3,000(2000) → 2,500 (2005) → 4,769 (2012) → 5,000(2013) and increasing fast manner
36
Public Employment Service
Integrated model of job placement, business creation, welfare services, health and medical services, and micro financing service with one stop visit under the one roof, same branded office
Central-local, public-private partnership model
Provide one-stop employment and welfare services
The first pilot Job/Welfare Plus Center was opened on 6th January, 2014 at Namyangju City in cooperation with various employment/welfare related agencies.
Employment and Welfare Plus Center
PES of Korea
Municipal Job Centers(289)
Special Job Centers
for the Disabled(18), Women(120), Veterans(5)
and Outplacement Service Center(25)
Regional Employment and Labor Office (6)
EWP Centers (94)
Job matching, Job counseling, Unemployment Benefits
Planning & Management
Division
Employment Support
Division I, II
Job Skills Development
Division
Enterprise Support Division
Local Cooperation
Division
Benefit Fraud Investigation
Division
Supporting vocational training
Subsidies, Employment Permit for migrant workers
Development of local partnership
37
Organizations Officers Services
Job Center (MOEL) 16 Job placement, unemployment benefit, career counseling, vocational training, employer services
Municipal Job Center 9 Job placement
New Job Center for Women (YWCA) 9 Job placement, vocational training, internship,
group counseling
Local Workfare Center (YWCA) 12 Workfare works, vocational training,
welfare to work program
Municipal Welfare Service Center 4 Welfare counseling, individual case management,
public assistance services
Namyangju Employment Welfare Plus Center
Participating organizations of Namyangju One-stop center
Employment Welfare Plus Center
Well Developed Job Matching
Website Makes PES
Efficient
Efficiency of Korean PES
1.5 Million
No of Job Placements
1.9 Million
2.5 Million
Korea Goyong Center
28,000
56,000
5,000
Officers
Japan Hellowork
France Pole Emploi
•Goyong means employment UK 64,000, US 60,000, Netherland 15,000
100,000 Germany Bundesagentur fur Arbeit
2.5 Million
Numbers of WorkNet No 1 website among 21,000 Korean Governmental Websites
770,000people
220,000 jobs
12.23 million people
3.26 million times
Potential jobs
Integrated Company information
Job information links
(No. 1) (No. 1)
3.35 million companies
107 organizations
No. of Work-Net app downloads
No. of daily visitors
No. of Work-Net members
Youth-friendly hidden champions: 891 companies
Visitors by Country: Germany 200,000/ Japan 460,000/ France 120,000/ the Netherlands 180,000
18 public institutions/ local governments, 81 regional Work-Net, 8 private employment portal
(No. 1)
Mobile Service
WorkNet Apps (3.26 Million downloads, Daily users 430,000) - Searching jobs - Easy job searching by setting the searching engine for individual purpose - Website and mobile real time connection - Jobs Around You service using GPS(List, Map, Satellite)
Labor Market Analysis System
EIS
Major Employment Information Networks of KEIS
Private Job
Portals Contracted- out
Providers Job
Centers of Other
Ministries
HRD Korea QNet
Municipal Job
Centers
National Health
Insurance Service
National Tax
Authority
Employment support
of migrant workers
(open 2004)
Subsidized job bank
(open 2009)
Employment Support
Job bank Application for jobs and
job seekers Tailored employment
support Career guidance
information
(open 1998)
Vocational Training
VT support for job seekers and the employed
VT support for employers Individual Training
Account
(open 2003)
Management of covered employees and enterprises
Administration of EI programs
(open 1995)
Employment Insurance
Tailored employment & welfare support
(open 2012)
Vocational skills development program
Training for the employed
(upgrade training)
Training for the unemployed
(initial training)
Employer Subsidy Training
Employee Subsidy Training
Training for national
key & strategic industries
Vocational training for job seekers
Local Governments
Vocational training for the
unemployed in farming &
fishing communities
Public vocational training
(Polytechnic colleges/KUT
E) (training for
industrial workforce)
1. Employer subsidy
Training 2. SME Target subsidy - National Consortium
Training - SME Core competency - Learning organization - Systemic OJT
1. Individual Training Account
2. Study and training loan
Skill development system of Korea
Type
Public training providers
Public organizations(35) Poly-tech(34), KUT(1)
Local government(5)
Government agencies(36) Ministry of Justice(36)
Private training providers (7,014)
Training corporations(55)
Private training institute(2,655)
Providers designated by MOEL(874)
Others(3,430)
Institutional Frame for Skill development
Budget for skill development in 2014 is 1.4 billion USD
’12 ’13 Plan ’14 Plan
Total 1,079,823 1,340,463 1,458,823
• Employer training subsidy 325,459 348,914 399,554
• Employee and unemployed 217,236 277,930 285,719
• National strategic industries 167,735 200,748 211,487
• SME skill development subsidy 109,800 201,878 239,670
• other subsidy 4,932 8,014 8,184
• HRD Korea 33,004 63,691 129,781
• Poly-tech University 102,600 106,388 113,748
• Korea Tech University 30,653 33,769 33,537
• Study and training loan 87,973 96,550 35,643
• Self-employed subsidy 431 2,581 1,500
- 4 Million people took training per year
Allows job seekers to freely choose vocational training courses The learning card (individual training account) is issued to those found to lack vocational skills after counseling at a Job Center. It is valid for one year from the date of issuance and offers a per person subsidy of up to 2 million KRW(2,000 USD). People receiving training under the system are mandatorily required to pay 25-45% of their training expenses on their own. However, people from low-income families, who participate in the 'employment success package' program, are exempt from the out-of pocket payment and subsidized up to 3 million KRW(3,000 USD).
Individual training Card system
- Combination of Active Labor Market Programs with EI benefit Job Matching Services & Individual Case Management Labor Market Information & Employment forecasting Career Guidance Skill Development - Short period of UB (90~240 days) - Low level of benefit - Early Reemployment Allowance - Huge employer subsidy programs
Characteristics of Korean EI
Conclusion
- Increase coverage and maximum benefit - Needs more public employment service capacity Work-first policy(5,000 > 20,000) Job Success Package for people exhausted the JSA, Korean UA - Budget balancing and cost effectiveness Mobile & online ES>Job Matching>Individual Case Management>training>JSA>employer subsidies> - Use employment security programs only for the crisis (PLMP, deadweight loss, substitute effect, fraud) - More involvement of trade unions and employers in the decision making - More partnership and contracting out for employment services
Conclusion
Further development of Korean EI
