The Employment Problem in Korea

What Korea has is not an "unemployment problem " but rather an "employment problem. " The employment problem includes continued high unemployment, but it goes well beyond it, also encompassing falling labor earnings, rising poverty and inequality, disproportionate impacts on disadvantaged groups, informalization of employment, increased job insecurity, and consequent social strains. This paper documents Korea's employment problem, characterizes the problem as deficient aggregate demand rather than frictional or structural unemployment, examines in some detail three of the most important elements of the social safety net (the Employment Insurance System, the Livelihood Protection Program, and public works), and considers four major ways of strengthening conditions in product markets and labor markets: stimulating macroeconomic growth, fighting unemployment and low earnings, improving the industrial relations climate, and establishing appropriate labor market flexibility