Extended Jobless Benefits May Slow Reemployment in Korea

A new report has raised concerns that Korea’s unemployment benefits policy may be having unintended effects. According to the Korea Labor Institute, the government’s recent decision to extend the benefit period — from the previous 90–240 days to 120–270 days — has coincided with a noticeable drop in reemployment rates. The average benefit duration has increased by around 30 days, yet the reemployment rate has fallen by 4.8 percentage points, suggesting that longer coverage may be discouraging some recipients from returning to work quickly.

The study’s age-based analysis revealed differing outcomes across demographics. Individuals under 30 saw virtually no improvement in reemployment rates after 18 months, while those aged 30–50 and over 50 experienced declines of 1.3 and 3.3 percentage points, respectively. In terms of wage recovery, workers under 30 recorded no improvement, while the 30–50 and 50-plus groups saw modest increases of 2.9% and 3.3%. Interestingly, young men were found to take longer to secure new positions without enjoying higher pay, and only women aged 30–50 experienced a slight 1.8% wage increase.

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The report also noted instances of “moral hazard” among younger job seekers — referring to cases where individuals became less motivated to actively pursue employment due to the steady flow of Korea unemployment benefits. Despite this, the government has announced a 3.18% increase in the daily maximum benefit for involuntarily unemployed workers, raising it from 66,000 won to 68,100 won starting next year.

While the policy aims to provide stronger financial stability for job seekers, the data underscores the delicate balance between supporting the unemployed and encouraging timely workforce reintegration — a challenge that Korea’s labor policymakers will need to address moving forward.

Source: (1)