Globalization,Unemployment and Policy Responses in Korea

Abstract

This article firstly examines the labour market reforms and consequent rise of unemployment in Korea after the economic crisis of 1997–8. Secondly it analyses policy responses from the Korean government to deal with the massive rise in unemployment: the Employment Insurance Programme, Public Work Projects and the Employment Services. The question this article seeks to answer is whether the role of the state within the welfare system was strengthened in the area of unemployment. This provides an interesting test case for the debate on the globalization hypothesis which suggests that the role of the state will decrease. Using eight models of state intervention, this article argues that the role of the state in Korea has been strengthened. The state came to take increasing responsibility for the financing of unemployment programmes. The article concludes that although globalization acts as a downward pressure on expenditure in some countries, it has exerted an upward pressure in the case of Korea.