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KMID : 1124020020180010001
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Korean Social Security Studies
2002 Volume.18 No. 1 p.1 ~ p.35
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How Big is the Adequate Contribution Rates of Employment Insurance System?
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Hur Jai-Joon
Kim Dong-Heon
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Abstract
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In this paper we introduce an index called the reserve ratio multiple to test employment insurance fund adequacy and derive adequate levels of contribution rates, considering developmental stages of the employment insurance system. The reserve ration multiple is a quotient that is computed from two ratios. The denominator is benefit outlays as a percentage of total covered payrolls in the highest cost year, while the numerator is total net reserves at the end of the current year expressed as a percentage of total covered payrolls for the year. Considering currently available data and our specific circumstances, we suggest that reserve ratio multiples of 1.0 and 1.5 (where the high-cost year is 1999) are adequate for the Employment Stabilization Program and the Job Skill Development Program, respectively. The adequate multiple for Unemployment Benefits is 2.1.
Based on long-term financial forecasts and simulation analysis of fund adequacy, it is estimated that the contribution rate for the Employment Stabilization Program needs to be reduced by 0.2 percentage point, while the contribution rate for the Job Skill Development Program needs to be raised by 0.15 percentage point. Even if maternity and parental leave benefits and the extension of coverage to daily workers would increase benefit payments, Unemployment Benefits do not need rate adjustment unless the employment insurance system introduces unemployment benefits for those who voluntarily leave their jobs. However, if those who voluntarily leave their jobs are entitled to receive unemployment benefits after a certain period of unemployment, it is necessary to adjust the contribution rate upward by 0.2 percentage point.
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