The number of new applications for unemployment benefits in South Korea last month hit a record high for November, signaling a red flag for the financial sustainability of the unemployment insurance system.

While the primary driver was an economic slowdown leading to job losses, widespread perceptions of unemployment benefits as “free money” have fueled a surge in fraudulent claims. Critics also argue that reliance on the unemployment insurance fund to cover costs like parental leave benefits is exacerbating the fund’s financial woes.

The Ministry of Employment and Labor announced on Dec. 9 that 90,000 new applications for unemployment benefits, officially known as job-seeking benefits, were filed last month, marking a 2.2% increase (or 2,000 applications) compared to the same period last year. This figure represents the highest for November on record.

As new applications surged, the total number of beneficiaries receiving unemployment payments in November reached 543,000, an increase of 1,300 (2.5%) year-on-year. Total disbursements for the month stood at 842.6 billion won ($590 million), up 1.5% ($87.5 million) compared to a year earlier.

Unemployment benefits in S. Korea are available to involuntary jobseekers who have been covered by employment insurance for at least 180 days in the 18 months before filing a claim. The rise in new claims reflects worsening labor market instability amid an economic downturn. The number of new job postings on the ministry’s WorkNet job...

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