Research Monographs

The Impact of Ill Health on Employment and Household Economic Conditions, and Its Policy Implications

The Impact of Ill Health on Employment and Household Economic Conditions, and Its Policy Implications

  • Author

    Kim, Sujin

  • Publication Date

    0000

  • Pages

  • Series No.

  • Language

This study aims to examine the effects of ill health on work status and earnings, and household economic condition in South Korea, and further to discuss policies to protect people from economic risk such as impoverishment due to diseases. The authors analyzed the Korea Health Panel and the Korea National Health Insurance claim data and conducted in-depth interview with people who experienced ill health. In addition, we analyzed social protections for sickness in South Korea and the Organisation for Economic Cooperation and Development (OECD) countries. This study found the occurrence of catastrophic illness led to a decrease in labor participation and decreased earnings. Furthermore, household labor income decreased and households experienced impoverishment after the occurrence of the disease. Total income, however, did not decrease with an increase in other source of income such as private insurance and severance pay. It implies households make efforts to weaken the economic impact of health shock by using other resources. The economic shock was not strong when hospitalization was used as the variable of health shock. The qualitative research showed similar results. Most workers experienced loss of their job after the occurrence of diseases, and causal workers more quickly lost their compared to regular workers. Most of the self-employed decided to close their business. In Korea, employers have no liability for their employee’s absences in case of sickness. In addition, there is no public coverage of cash sickness benefits. These lead most workers to experience both loss of their job and a decrease in income when they experience sickness. By contrast, almost all OECD countries mandate employers to provide paid sick day or sick leave for a certain period and implement some social protection measures that provide financial supports to workers during a period of temporary work incapacity. Among OECD countries, Korea is the only country that does have neither one of those. In conclusion, there is an urgent need to implement social protection measures for employees undergoing sickness and temporary absences from work. Considering cases in other OECD countries, statutory liability for employers should be introduced. In addition, an insurance-based income support measure could be implemented through its existing national health insurance or its employment insurance infrastructure to further protect vulnerable workers.  

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