8th ADBI-OECD-ILO Roundtable on Labor Migration in Asia

30-31 January 2018, Seoul, Korea

An Overview of Social Security for Migrant Workers

in the Republic Of Korea:
With Focus on the Korea’s Employment Permit System

Dr. Julia Jiwon Shin (Chonnam National University)

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development
Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences
of their use. Terminology used may not necessarily be consistent with ADB official terms.
Contents

1. Introduction
2. Basic social insurances for Migrant workers
3. Migrant-specific insurances under the provision of the EPS
4. Realities and Limitations
5. Conclusion
1. Introduction

◦ Legal definitions (the Act on Foreign Workers’ Employment, etc.)

◦ A ‘foreign worker’ – a person who does not have Korean nationality and who works or
intends to work in a business or workplace located in Korea for the purpose of earning wages
◦ A ‘temporary’ foreign worker - a migrant worker (aged between 18 and 39) who is allowed to
stay in Korea only for a brief period of time and who works in a business or workplace located
in Korea for a period allowed under the general Employment Permit System (E-9) and the
Working Visit System (H-2)
◦ Definition of ‘social security’
◦ ‘Social security’ mainly refers to public policy measures, in particular, a state-based scheme,
which aims to “protect the members of society against social, economic distress in relation to
sickness, economic insecurity, unemployment, disability, poverty, old age and so on.” (ILO,
2010, cited in Taha, et al., 2015:97)
 2. Basic social insurances for Migrant workers
Industrial accident
National health Employment
compensation National pension
insurance insurance
insurance
Preventing
unemployment,
promoting
Guaranteeing the employment,
Prevention, diagnosis,
livelihood of workers enhancing job
treatment recovery from Compensation,
and the bereaved with capability, stabilizing
Coverage disease and injury, nursing and recovery
no income due to livelihood and
childbirth, death and for industrial accidents
aging disability and supporting
improving health
death reemployment by
paying
unemployment
benefits
Industrial Accident
National Health Employment
Related Act Compensation National Pension Act
Insurance Act Insurance Act
Insurance Act
2. Basic social insurances for Migrant workers (cont.)
Industrial accident Employment
National health National pension
compensation insurance
insurance
insurance

Insured Migrant workers Migrant workers Migrant workers Migrant workers

Level of BLAs and Principle

Mandatory Mandatory Voluntary
requirement of reciprocity

Method of paying
Monthly Once a year Monthly Monthly
insurance fees

Employer &
Migrant worker
Person paying Employer (50%) Employer (50%)
Employer (100%) (paying only for
insurance fees Migrant worker (50%) Migrant worker (50%)
unemployment
benefit)
◦ the Korean National Pension Service (NPS)
◦ Since 1999, NPS follows the principle of reciprocity and bilateral social security agreements
between Korea and the migrant’s home country.
◦ Migrants whose countries do not cover Korean nationals, however, are excluded from the
coverage of NPS (Article 126 of the National Pension Act). Despite the above provisions, if
there are relevant provisions under the Social Security Agreement between Korea and migrants’
home countries, those provisions are applied (Article 127 of the National Pension Act).
◦ In principle, a lump-sum refund of the pension is not paid to foreign insured persons.
Nevertheless, in the case of foreigners falling under any of the following categories, a lump-
sum refund is paid.
◦ Persons whose country grants a benefit corresponding to a lump-sum refund under the
National Pension Scheme (principle of reciprocity). E.g., Thailand, Malaysia, Sri Lanka,
Indonesia, Kazakhstan, Philippines
◦ Persons whose home country has concluded a social security agreement with Korea
regarding the payment of the lump-sum refund, is eligible for the Korean lump-sum refund
as well as pension benefits (Article 126 of the National Pension Act; Article 113 of the
Enforcement Decree of the National Pension Act). E.g., China, Uzbekistan, Mongolia
◦ Since 2011, regardless of nationality, the following migrants have been eligible for the lump-
sum refund:
(1) migrant workers who are employed at a workplace covered by the National Pension as a
‘foreign workers’ stipulated in the act on employment of foreign workers (which fall under
E-9 or H-2 visa status under the Enforcement Decree of the Immigration Control Act)
(2) industrial trainees who are employed at the workplace covered and does not desert the
designated training places during required training periods under Article 10 of the
Immigration Control Act (which fall under E-8 visa status under the Enforcement Decree
of the Immigration Control Act).
 3. Migrant-specific insurances under the provision of the EPS
Departure guaranty Guaranty Return cost Casualty insurance
insurance insurance insurance
Objective To reduce the burden To guarantee unpaid To supplement the To provide against
paying the severance salary costs necessary to death or disability of
pay in a lump sum return home migrant workers other
than industrial
accidents in
workplaces
Legal Basis Article 13 of the EFW Article 23 of the Article 15 of the EFW Article 23 of the EFW
Act, Article 21of the EFW Act, Article 22 Act, Article 22 of the Act, Article 28 of the
enforcement decree of of the enforcement enforcement decree of enforcement decree of
the EFW Act decree of the EFW the EFW Act the EFW Act
Act
Person who Employer Employer Employee Employee
subscribe to
insurance
Person insured Employee Employee Employee Employee
 3. Migrant-specific insurances under the provision of the EPS (cont.)
Departure guaranty Guaranty insurance Return cost Casualty insurance
insurance insurance
Lump sum payment (the
Per employee 16,000 Lump sum payment
8.3% of employee’s salary amount varies
Insurance fees per month
(approx. US$15) won from 400,000 to 600,000
depending on gender,
per year won
age and period of stay)
Within 15 days of the Within 15 days of the eff Within 80 days of the Within 15 days of the
Application
effective date of the ective date of the employ effective date of the effective date of the
period employment contract ment contract employment contract employment contract
Death or disability
Total amount will be pai
Saving as a retirement pay caused by injury: max.
d upon departure of fore
Case of (when employee departure Total unpaid salary – ma 3o million won
ign workers for home co
insurance claim or change of working place ximum of 2 million won Death or disability
unties (except temporary
without desertion worked) caused by sickness: max.
return)
15 million won

Penalties Less than 5 million won

4. Realities and Limitations
◦ Social insurances as well labour rights and legal protection have not fully applied to migrant
workers in practice. Key issues as follows.
◦ The temporary nature of employment contract which normally lasts less than three or five
years hinders migrant workers enjoying the full social insurance benefits, especially
unemployment benefits (covered by the voluntary-based employment insurance) and national
pension (not portable in most EPS sending countries but only lump sum refund available when
migrants return home)
◦ There are relentless violations of subscription of mandatory insurance by employers, such as
National Health Insurance and EPS insurances, not to mention those voluntary-based
insurances.
◦ Due to lack of information and knowledge about social insurance policy as well as language
problems, some migrant workers are not well aware of their eligibility of social insurances and
benefits which can be claimed when they return.
E.g., A large amount of dormant claims (over 11 billion won) of Departure Guaranty
Insurance and Return Cost Insurance
5. Conclusion

◦ The nature of international migratory processes therefore requires us to look

beyond the perspective a receiving country when considering the issue of social
protection for migrant workers.
◦ The empowerment of migrant workers and transnational cooperation can be
important tools to help realise such policy of protecting and enhancing the
benefits of labour migration for workers and their families.
◦ Migration policy is not all about statistical figures and ‘well-managed’ processes. It
concerns ‘people’, i.e., individuals, families and children, and their dreams and
hopes. It is, therefore, urged to consider the ways in which the Korea’s migration
policy could embrace human, labour and social rights of temporary migrant
workers and their children.
THANK YOU.