South Korean employment insurance trends and fraud

Data from South Korea’s Ministry of Employment and Labor indicates a significant rise in employment insurance payouts. Foreign workers have seen a substantial increase in benefits, with parental leave benefits doubling to 36.45 billion won and unemployment benefits reaching a record 113.4 billion won. The number of foreign workers enrolled in employment insurance has grown 2.6 times over the last four years, reaching 458,644 people. Benefits are highly concentrated among Chinese nationals and ethnic Koreans from China, who accounted for approximately 78.9% of last year’s foreign unemployment benefits.

Concurrently, reports highlight a trend of repeat unemployment benefit recipients. Approximately 113,000 individuals received benefits three or more times within a five-year period, with total payments reaching nearly 600 billion won. Notably, 65,000 of these individuals repeatedly resigned from and rejoined the same workplace. Investigations into fraudulent claims have uncovered organized schemes, such as a business owner in Daegu who allegedly used brokers to recruit fake employees to claim approximately 540 million won. Additionally, the number of detected fraudulent recipients staying abroad increased by 57% last year.

As the number of fixed-term and part-time workers reaches record levels, calls for systemic reform have intensified. Concerns regarding moral hazard have been raised, noting that minimum benefits can sometimes exceed the take-home pay of minimum wage workers. In response, the government is planning to adjust benefit calculation standards to better align with minimum wage levels. National Assembly member Kim So-hee has also proposed increasing the minimum insurance contribution period from 180 days to 12 months to prevent the exploitation of short-term employment cycles.