Korea: Improving the Re-employment Prospects of Displaced Workers

image of Korea: Improving the Re-employment Prospects of Displaced Workers

In Korea's dynamic labour market, job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over the course of their working lives. Some workers are more vulnerable than others to this risk and may face long periods of unemployment/inactivity after displacement, particularly if their skills are not well-matched to emerging job opportunities. Even when they find new jobs, displaced workers tend to be paid less, have fewer benefits and are more likely to be overskilled than in the jobs they held prior to displacement. Helping displaced workers get back into good jobs quickly should be a key goal of labour market policy. To achieve this goal, Korea needs to increase resources devoted to re-employment programmes, such as job-search training and job matching, to improve their performance and better target those who need the most help. Existing training programmes need to be revised to ensure that people are obtaining skills that will help them find work. The social safety net also needs to be strengthened to lower the personal and societal costs of displacement, notably by improving the coverage of unemployment benefits.


Executive summary

The incidence of job displacement, or involuntary job loss due to economic reasons such as firm closure or downsizing, has not risen in Korea over the past decade. However, displacement risk, and the difficulty of finding a new job, increases in economic downturns. Older workers, the least qualified and those in small firms are particularly vulnerable to displacement, and to being out of work for a long time afterwards.


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