The contents of Korea’s Employment Insurance System (ELS) are categorized into three main programs: the Employment Stabilization and Vocational Competency Development Program (ESVCDP), the Unemployment Benefit Program (UBP) and the Child Care Benefit Program (CCBP). To secure adequate financing for the ELS programs, the Employment Insurance Fund (ELF) was installed by the Labor Min-ister. The ELF accounts shall be managed separately between the ESVCDP and UBP (including the CCBP).

    This study indicates that the ELS works as an automatic stabilizer so that hav-ing sufficient-sized reserve is an absolute necessity in playing this role. This study also reviews performance of the UBP account and provides five-year projections for its premium revenues and expenses under current law.

    As a result, unemployment benefits are expected to increase from 3.8 trillion won in 2011 to 5.0 trillion won in 2015, owing to growing beneficiaries. The child care benefits are projected to rise from 0.4 trillion won to 0.6 trillion won over the projection horizon. The premium revenues, on the other hands, are projected to rise from 3.0 trillion won to 4.0 trillion won over the projection horizon. Accordingly, the UBP account will remain in deficit and its reserve will be exhausted by 2013.

    On the basis of critical review, this study suggests that the Government should take policy actions to impact the finances of the UBP account.