S. Korean workers most vulnerable to unemployment risk in OECD bloc

Korean workers turned out to be most vulnerable to an economic crisis compared with their counterparts in other OECD countries, due to the country’s extraordinarily low levels of unemployment benefits, a report showed Tuesday.

Local labor authorities provided unemployed workers with financial aid worth about 30.4 percent of their previous full-time wages for one year upon being laid off as of 2009, according to the OECD report titled “Employment Outlook 2011.”

The level of unemployment benefits lagged far behind the average 58.6 percent given among the 34 OECD member countries and marked the second lowest level after Czech Republic’s 29.7 percent, the report showed.

The data is based on the average unemployment benefits provided to 40-year-old workers in the member countries and the OECD average means workers retained 58.6 percent of their former salaries even after losing their jobs.

Luxembourg granted the highest rate of unemployment benefits with 85.1 percent for the first year of joblessness while Switzerland provided aid worth 80.7 percent of full-time wages, followed by Portugal with 79.3 percent, the report showed.

Among the countries with low benefit rates was Britain, which paid out 33 percent of wages. Poland gave out 44.1 percent and the rate in the United States was 44.9 percent, the report also said.

South Korea’s unemployment assistance became almost scant when a worker’s joblessness entered the second year with workers being provided with only 0.6 percent of their former full-time salary, it noted, indicating local workers were exposed to grave financial difficulties without a buffer during prolonged unemployment.

Even during the second year of unemployment, meanwhile, the average OECD country paid out nearly 40.4 percent of former earnings, the report added.

The average OECD rate shrank to 15.5 percent for the third year, 12.9 percent for the fourth and 9.3 percent for the fifth while the local rate stayed the same at 0.6 percent for all years except the first year, according to the data.

The results illustrate South Korea’s still feeble social security system. The country officially aids unemployed people for only the first year after losing their job.

“For the first year of unemployment, OECD’s average salary recovery rate nearly reaches half of the former wages. But the rate nosedives below the 10 percent level from the second year in South Korea, Japan, Luxembourg and Italy,” the report said. “That’s because workers lose entitlement to unemployment pay and other benefits (as their joblessness is prolonged).” 

(Yonhap News)