Fiscal Projection of Employment Insurance over 2018-2027
- Focusing on unemployment benefits, maternity protection & childcare support -
Published on 26 November 2018
Published by Economic Cost Estimates Division of the Estimates & Tax Analysis Department
In the context of enhancing the coverage of employment insurance, this report contains an estimation of the fiscal demands for the next 10 years as well as a forecast of the revenue, expenditure and fiscal balance of the salary workers’ unemployment benefit account within the employment insurance fund with a focus on unemployment benefits, maternity protection and childcare support, which make up the major mandatory expenditure programs of the employment insurance fund. In addition, a comparison of this forecast is made with the Proposed Fund Management Plan for the Employment Insurance Fund in 2019 and The Mid-to-Long Term Financial Management Plan for the Employment Insurance Fund from 2018 to 2022.
According to an estimation of the fiscal demands incurred by strengthened coverage of employment insurance conducted within the framework of the Proposed Fund Management Plan for the Employment Insurance Fund in 2019, the estimated additional fiscal demand required over 2019-2027 as unemployment benefits is 1.3 trillion Korean won on average, compared to the baseline fiscal demand when the current system is maintained. If the systemic changes in the relevant benefits were to be incorporated according to the plans pursued by the Ministry of Employment and Labor, the fiscal demand for maternity protection and childcare support is estimated to be an additional 0.2 trillion Korean won above the baseline on average each year over 2019-2027.
Taking into consideration the fiscal demands incurred by strengthened coverage through employment insurance, the Ministry of Employment and Labor plans to raise the premium rates for unemployment benefits from the current 1.3% to 1.6%. An additional revenue of 1.6 trillion won is expected in 2019 due to the increased contribution rate for unemployment benefits with an additional annual average of 2.0 trillion won in revenue over 2019-2027. The fiscal balance of the employment insurance fund unemployment benefits account is expected to record a 0.15 trillion deficit in 2018, but revert to a surplus from 2019.