South Korea's Employment Insurance Fund recorded its highest spending level since the height of the COVID-19 pandemic, with expenditures exceeding KRW20tn ($13.3bn) in 2025 amid rising unemployment benefit payments and enhanced childcare leave support.
According to the Ministry of Employment and Labor's 2025 Fiscal Year Employment Insurance Fund Settlement Report, total fund expenditure reached KRW20.94tn last year, up 12.3% from KRW18.65tn in 2024. It was the first time spending had surpassed the KRW20tn mark since 2021, when expenditure stood at KRW21.06tn. The fund is financed primarily through employment insurance contributions from workers and employers.
The increase was driven largely by a surge in unemployment-related payments. Expenditure from the unemployment benefits account climbed 15.2% year-on-year to a record KRW17.48tn, reflecting both higher benefit levels and growing demand for support.
Job-seeking benefits in South Korea are linked to the minimum wage and are calculated at 80% of the minimum wage level. As minimum wages have risen steadily in recent years, benefit payments have also increased. At the same time, prolonged weakness in key sectors such as manufacturing and construction has contributed to higher unemployment, placing additional pressure on the insurance fund.
The expansion of childcare leave benefits, including higher payment ceilings, also contributed to the increase in overall fund expenditure.
The Ministry of Employment and Labor set up a tripartite task force in November 2025 to examine ways to improve the employment insurance system and bolster the fund's financial sustainability. However, concrete reform measures have yet to emerge, with potential proposals such as higher contribution rates expected to face pushback from both businesses and workers over the additional financial burden.