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Active labour market policies are actions that governments take to help the unemployed back into work. InSouth Korea, they are administered under the direct supervision of theMinistry of Labor and Employment. They involve subsidized education, vocational training, direct monetary support, and low interest loans.
The South Korean government, following the end of theKorean War, had little need for active labor market policies. Records from the Korea Labor Institute show that up to 10.4% of Korea's population was unemployed in 1963.[1] Additionally, Korea's largest exports at the time were shoes, wigs, and plywood: all items that are produced through low skilled labor. Through the 1970s, the transfer of workers from the majority agrarian population into urban light industry provided a steady source of labor for Korean firms.[1] Additionally, the constant need for low to medium skilled work gave workers an unwritten job security. Most workers enjoyed the benefits of proper notification and a chance to challenge unfair dismissal. This system continued well into the 1990s, by which point theMiracle on the Han River had caused miraculous levels of economic growth. The Korean market, by this point, was dominated by large family-run conglomerates known aschaebols. The unemployment crisis faced by the nascent South Korea were the least of the nation's concerns by the 1990s: studies report that by 1997, only 2.5% of Koreans were unemployed.[1] However, the sharp downturn the Korean economy experienced later that year during theAsian Economic Crisis proved the need for an active labor market policy and marked the end of labor elasticity and the postwar economic miracle in Korea.[2]
The crisis continued into the new millennium and with it came the end of Korean industry giantDaewoo and other prominent chaebols. As such, the nation experienced heavy spikes in unemployment, rising to near 8.7% unemployment rate by February 1999.[2] The D.C based think tank,Brookings Institution states that an 8.7% employment rate in Korea is similar, in intensity, to a 13% unemployment rate in otherOECD nations.[3] This is attributed to the weakness of Korean social services and the lack of women in the labor force to support unemployed husbands. In response to the national and regional crisis, a tripartite commission under theDae-jung government authored the first active labor market legislature in the Korean government. This included clauses that weakened unemployment protection. However, legislature like the Dispatched Worker's Act created new, temporary, short-term jobs for workers who had been laid off or out of work.[4] Social expenditure under this commission's policy accounted for 4.8% of the total budget between 1997 and 2003, compared to 2.3% between 1990 and 1996.[2] This expansion led to the creation of what is classified as "non-regular labor" by the Korean government, which were originally meant to curb unemployment during the market recovery. The rise of these "non-regular" positions led to the birth of a polarizinginsider-outsider structure in the Korean labor market.[5] Scholars commonly refer to this situation as labor market duality in Korea.[5]
Eligibility:
The duration of the benefit can be extended to 240 days depending on the age and the duration of thebeneficiary's unemployment insurance status.
