Employment Service Reform Plan

in Korea

Presenter: Jung, Tai-Myun, Director of Employment Policy Division

Ministry of Labor, ROK

1. Recent Trends in the Labor Market2. Major Challenges and Policy Directions3. Background of Employment Service Reform4. Current Status and Challenges of Employment

Service5. Trends in Other Countries and Implications6. Action Plan7. Expected Outcome and Strategies

Overview of the Presentation

1. Recent Trends in the Labor Market

Overall capacity to create jobs has fallen due to the decrease in the potential growth rate

Growth rate(%) : 8.7(80s) 6.3(90s) 5.4(’00~’04)

Employment coefficient(persons/100 million won)

: 5.64(’90) 4.37(’95) 3.66(’00) 3.34(’03)

1. Recent Trends in the Labor Market

※ Employment rate (%)

: 63.7(’97) 59.6(’99) 63.3(’02) 63.6(’04)

The number of employed decreased in 2003(by 30,000) but rose by

420,000 in 2004.

Employment increased in manufacturing(84,000) and service(455,000),

while it decreased in agriculture, forestry and fishing (125,000)

Employment rate was 63.6% in 2004, still lower than the pre-crisis level (63.7% in 1997)

1. Recent Trends in the Labor Market

Unemployment rate for 2004 was 3.5%(813,000 persons), while the youth unemployment rate was 7.9%(391,000 persons)

Despite high youth unemployment, SMEs are experiencing labor shortages (a job mismatch)

Labor shortages in SMEs (1,000 persons) : 67(’00) 139(’02) 168(’0

4)

Non-regular workers continue to rise in number

3.79 million (’02.8) 4.60 million (’03.8) 5.40 million (’04.8)

Government’s goal is to create 2 million jobs between 2004 and 2008.

To promote new growth engines, and enhance corporate employment capac

ity through deregulation

To implement measures such as job creation in social services, job sharing

and filling vacancies in SMEs

2. Major Challenges and Policy Directions

The government also plans to advance employment services.

To reduce mismatch in labor supply and demand, provide customer-

oriented employment services, strengthen linkage between employment

information networks, and strengthen local employment networks

2. Major Challenges and Policy Directions

Innovating vocational ability development for lifelong learning system

To expand vocational training opportunities for workers in SMEs and non-r

egular workers

To build a lifelong vocational training system to satisfy the needs of each re

gion and industry

2. Major Challenges and Policy Directions

Strengthening social safety net

To raise compliance rate of small firms and daily workers, and to design

measures to expand coverage of employment insurances for small self-

employed workers

To link unemployment benefits to employment support measures and to

link industrial accident compensation insurance to early return to work

To establish a 5-year plan to improve employment conditions of non-

regular workers

2. Major Challenges and Policy Directions

Minimize a job mismatch and skill mismatch by developing and smoothly supplying human resources

Enhance support for employment security of the vulnerable

Address polarization of the labor market and improve flexibility and stability

Expand labor market participation of untapped potential labor

3. Background of Employment Service Reform

4. Current Status and Challenges of Employment ServiceCurrent status

Established 9 employment networks

Public employment service centers (ESC) began to be created in earnest

from 1998 (118 employment security centers and local centers)

Private employment service agencies : 7,900 job placement agencies, etc.

4. Current Status and Challenges of Employment ServiceChallenges

Employment information infrastructure : quite advanced in terms of quantit

y but weak in functions

Lack of function and link between public ESCs (market share of ESC is les

s than 5%)

Private agencies are small and mostly for unskilled labor jobs

High college enrollment rate (81.3%) but insufficient employment service a

t college

5. Trends in Other Countries and Implications

Development of employment service

Phase 1: advent of employment service

Phase 2: public monopoly of employment service

Phase 3: partial permission for private employment service

Phase 4: enhanced role of private employment service

5. Trends in Other Countries and Implications

Recent trends and implications

Building an integrated employment network

Enhancing the network of local employment organizations

Innovating and expanding public employment service

Strengthening public-private partnership in Korea along with the public

employment service reform that began in 1998

Employment information infrastructure

Establish an integrated labor market information system that connects 9

employment networks together

Build employment information analysis system to enhance production and

analysis of labor market information

Set up user-centered on-line information system

Expand expert agencies that integrate and manage employment information

infrastructure

6. Action Plan

Introduce a ‘One-stop Individual Case Management’

System’ that covers from counseling to adjusting to workplace

Enhance service for companies: vocational training and labor supply for firms with labor shortages

Provide localized employment service through local employment networks centering around ESCs

Strengthen customer-centered service by improving expertise and promoting a performance-based organization and operating system

6. Action Plan

Improve ESC capability

Establish a municipal employment service system

Enhance employment service for the vulnerable linking employment with

welfare programs

Expand exclusive employment service systems of municipalities

Support employment-related localization projects through partnership

6. Action Plan

Private sector

Support the development of private employment service agencies through deregulation, private entrustment, financial support, etc.

Enhance the role of universities through employment support compact between universities and ESCs and strong university-company networks, etc.

6. Action Plan

Expected outcomeFor individuals, better access to employment information and service that meet individual demandFor firms, competitiveness improvement by efficiently obtaining human resourcesNationally, efficient development and use of HR contribute to securing sustainable growth engine

7. Expected Outcome and Strategies

StrategiesDesignate a pilot center for employment service reform to create and diffuse success modelsPromote active policy exchanges with international organizations and advanced countries