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Employment Service Reform Plan in Korea

Employment Service Reform Plan in Korea. Presenter: Jung, Tai-Myun, Director of Employment Policy Division Ministry of Labor, ROK . Overview of the Presentation. Recent Trends in the Labor Market Major Challenges and Policy Directions Background of Employment Service Reform

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Employment Service Reform Plan in Korea

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  1. Employment Service Reform Plan in Korea Presenter: Jung, Tai-Myun, Director of Employment Policy Division Ministry of Labor, ROK

  2. Overview of the Presentation • Recent Trends in the Labor Market • Major Challenges and Policy Directions • Background of Employment Service Reform • Current Status and Challenges of Employment Service • Trends in Other Countries and Implications • Action Plan • Expected Outcome and Strategies

  3. 1. Recent Trends in the Labor Market Overall capacity to create jobs has fallen due to the decrease in the potential growth rate Growth rate(%) : 8.7(80s)  6.3(90s)  5.4(’00~’04) Employment coefficient(persons/100 million won) : 5.64(’90)  4.37(’95)  3.66(’00)  3.34(’03)

  4. 1. Recent Trends in the Labor Market Employment rate was 63.6% in 2004, still lower than the pre-crisis level (63.7% in 1997) ※ Employment rate (%) : 63.7(’97)  59.6(’99)  63.3(’02)  63.6(’04) The number of employed decreased in 2003(by 30,000) but rose by 420,000 in 2004. Employment increased in manufacturing(84,000) and service(455,000), while it decreased in agriculture, forestry and fishing (125,000)

  5. 1. Recent Trends in the Labor Market Unemployment rate for 2004 was 3.5%(813,000 persons), while the youth unemployment rate was 7.9%(391,000 persons) Despite high youth unemployment, SMEs are experiencing labor shortages (a job mismatch) Labor shortages in SMEs (1,000 persons) : 67(’00)  139(’02)  168(’04) Non-regular workers continue to rise in number 3.79 million (’02.8)  4.60 million (’03.8)  5.40 million (’04.8)

  6. 2. Major Challenges and Policy Directions Government’s goal is to create 2 million jobs between 2004 and 2008. To promote new growth engines, and enhance corporate employment capacity through deregulation To implement measures such as job creation in social services, job sharing and filling vacancies in SMEs

  7. 2. Major Challenges and Policy Directions The government also plans to advance employment services. To reduce mismatch in labor supply and demand, provide customer-oriented employment services, strengthen linkage between employment information networks, and strengthen local employment networks

  8. 2. Major Challenges and Policy Directions Innovating vocational ability development for lifelong learning system • To expand vocational training opportunities for workers in SMEs and non-regular workers • To build a lifelong vocational training system to satisfy the needs of each region and industry

  9. 2. Major Challenges and Policy Directions Strengthening social safety net To raise compliance rate of small firms and daily workers, and to design measures to expand coverage of employment insurances for small self-employed workers To link unemployment benefits to employment support measures and to link industrial accident compensation insurance to early return to work To establish a 5-year plan to improve employment conditions of non-regular workers

  10. 3. Background of Employment Service Reform Minimize a job mismatch and skill mismatch by developing and smoothly supplying human resources Enhance support for employment security of the vulnerable Address polarization of the labor market and improve flexibility and stability Expand labor market participation of untapped potential labor

  11. 4. Current Status and Challenges of Employment Service Current status • Established 9 employment networks • Public employment service centers (ESC) began to be created in earnest from 1998 (118 employment security centers and local centers) • Private employment service agencies : 7,900 job placement agencies, etc.

  12. 4. Current Status and Challenges of Employment Service Challenges • Employment information infrastructure : quite advanced in terms of quantity but weak in functions • Lack of function and link between public ESCs (market share of ESC is less than 5%) • Private agencies are small and mostly for unskilled labor jobs • High college enrollment rate (81.3%) but insufficient employment service at college

  13. 5. Trends in Other Countries and Implications Development of employment service Phase 1: advent of employment service Phase 2: public monopoly of employment service Phase 3: partial permission for private employment service Phase 4: enhanced role of private employment service

  14. 5. Trends in Other Countries and Implications Recent trends and implications Building an integrated employment network Enhancing the network of local employment organizations Innovating and expanding public employment service Strengthening public-private partnership in Korea along with the public employment service reform that began in 1998

  15. 6. Action Plan Employment information infrastructure Establish an integrated labor market information system that connects 9 employment networks together Build employment information analysis system to enhance production and analysis of labor market information Set up user-centered on-line information system Expand expert agencies that integrate and manage employment information infrastructure

  16. 6. Action Plan Improve ESC capability Introduce a ‘One-stop Individual Case Management’ System’ that covers from counseling to adjusting to workplace Enhance service for companies: vocational training and labor supply for firms with labor shortages Provide localized employment service through local employment networks centering around ESCs Strengthen customer-centered service by improving expertise and promoting a performance-based organization and operating system

  17. 6. Action Plan Establish a municipal employment service system Enhance employment service for the vulnerable linking employment with welfare programs Expand exclusive employment service systems of municipalities Support employment-related localization projects through partnership

  18. 6. Action Plan Private sector Support the development of private employment service agencies through deregulation, private entrustment, financial support, etc. Enhance the role of universities through employment support compact between universities and ESCs and strong university-company networks, etc.

  19. 7. Expected Outcome and Strategies Expected outcome For individuals, better access to employment information and service that meet individual demand For firms, competitiveness improvement by efficiently obtaining human resources Nationally, efficient development and use of HR contribute to securing sustainable growth engine Strategies Designate a pilot center for employment service reform to create and diffuse success models Promote active policy exchanges with international organizations and advanced countries

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