Giving people better opportunities to participate in the labour market improves well‑being and strengthens economic growth. Better labour market and social protection policies help countries to cope with rapid population ageing by mobilising potential labour resources more fully. Many OECD countries achieved record employment levels prior to the global financial crisis, but in all countries employment rates differ markedly across population groups. High unemployment, weak labour market attachment of some groups in society, and frequently unstable, poor‑quality employment reflects a range of barriers to working or moving up the jobs ladder. In many countries the crisis has accentuated long‑standing structural problems that are causing these disadvantages. It is a major challenge for policy makers in the coming years to address these problems and make OECD labour markets and, thus, OECD economies more inclusive.

The government of Korea is determined to find ways to close considerable gaps in the country’s social protection system and ensure adequate employment and income support for low‑income jobseekers and the working poor. Current gaps are the combined result of a system that excludes some people outright and allows others to go undocumented and, therefore, without social protection coverage. This situation contributes to considerable inequality and poverty, reinforces widespread labour market duality and leads to poorer job outcomes alongside lower, less‑inclusive economic growth.

Korea has gone through remarkable economic development over the past 40 years. Korea’s export‑led, manufacturing‑driven growth strategy has yielded faster economic growth than virtually anywhere else in the world, rapidly diminishing the gap between Korea and the OECD average in GDP per capita terms. Parallel to its rapid economic transformation, Korea has witnessed a considerable social transformation towards becoming one of the world’s most highly educated societies alongside rapid population ageing as a result of low fertility and rising life expectancy.

This chapter provides a concise overview of labour market trends and challenges in Korea. It describes how Korea’s vast economic and social development has shaped its labour market over the past five decades. The analysis highlights Korea’s predominance of micro‑enterprises with low productivity; widespread culture of subcontracting practices; high incidence of non‑regular work; and the impact of these phenomena on labour market dualities and ongoing weaknesses around job quality and labour market inclusiveness. The chapter also discusses the challenges vulnerable groups – particularly women, youth and older workers – face within the labour market.

This chapter looks at the development, take‑up and effectiveness of the main systems in place in Korea to support jobseekers and the working poor in finding employment and earning a decent income. The discussion focuses on four schemes: the Employment Insurance (unemployment benefit), the Basic Livelihood Security Programme (social assistance), the Employment Success Package Programme (employability support) and the Earned Income Tax Credit (in‑work support). The chapter also discusses how the programmes are administered and delivered. It concludes that better enforcement of the systems already in place could go a long way in closing the social protection gaps as Korea strives to create a more robust and mature welfare state.

This chapter looks at the social protection measures applied in OECD countries. The analysis benchmarks common types of income support and activation measures for unemployment, temporary work incapacity and other types of poverty risk. It highlights lessons for Korea based on the commonalities and differences among the measures implemented across the OECD, focusing on several of their operational features. The discussion, in particular, looks at the coverage conditions such measures entail; the duration and scope of the support they provide; the active features they embody; and the supporting policies through which they are implemented.

This chapter discusses various policy solutions Korea can implement towards achieving more complete social protection coverage and better labour market outcomes. Drawing from the experiences of other OECD countries, Korea has managed to put in place an effective legislative framework with a strong focus on activation and employment. Nevertheless, various steps can be taken to broaden and improve Korea’s existing social protection measures. First, Korea can achieve considerable improvements through more rigorous enforcement of current policies and legislation. Second, Korea can enhance each of its existing social protection measures to further narrow down their remaining coverage gaps. Third, Korea should urgently introduce more far-reaching changes to support workers encountering temporary work incapacity due to poor health.