5 Major Social Insurance Contributions Surpass 177 Trillion Won... "Employment and Investment Contraction"

Doubled in 10 Years... Highest Among OECD Countries
"Improvements Needed in Expenditure Efficiency and Balanced Contribution Principles"

Social insurance premiums have more than doubled over the past decade, increasing the financial burden on both citizens and businesses. It is pointed out that this not only reduces consumption but also suppresses employment and investment, thereby hindering economic growth.

According to the report "Status of the Burden of the Five Major Social Insurances on Citizens and Policy Improvement Tasks" released by the Korea Employers Federation on the 10th, the total amount of the five major social insurance premiums borne by citizens in 2023 was recorded at 177.7872 trillion KRW. This represents a 7.1% increase compared to 165.9969 trillion KRW in 2022.

Health insurance accounted for 82.1036 trillion KRW, making up 46.2%, followed by national pension at 58.3698 trillion KRW (32.8%), employment insurance at 17.8157 trillion KRW (10.0%), long-term care insurance at 10.3927 trillion KRW (5.9%), and industrial accident insurance at 9.1054 trillion KRW (5.1%).

The total social insurance premiums borne by labor and management in companies amounted to 149.8974 trillion KRW, accounting for 84.3% of the total, with employers bearing 81.33 trillion KRW, which is 45.7% of the total.

Notably, the scale of social insurance premiums, which was 85.884 trillion KRW in 2013, has increased by 2.1 times over ten years. The report pointed out that this increase in social insurance premiums significantly exceeds the inflation rate and the gross domestic product (GDP) growth rate, failing to properly reflect the national economic situation.

The report explained, "The average annual growth rate of social insurance premiums over the past 10 years was 7.5%, which is 4.2 times the average annual inflation rate (1.8%) during the same period and 1.8 times the nominal GDP growth rate (4.3%). The ratio of social insurance premiums to GDP also increased significantly from 5.5% in 2013 to 7.4% in 2023."

Compared to other countries, the growth rate of social insurance premiums is also rapid. The burden of social insurance relative to GDP in Korea steadily increased from 2.7% in 1997, shortly after joining the Organisation for Economic Co-operation and Development (OECD), to 4.9% in 2007, 6.5% in 2017, and 8.2% in 2022.

The increase rate over the past 10 years was 39.5%, the highest among OECD countries. This is about 2.7 times higher than Japan (14.8%), the world's most aged country, and stands in stark contrast to the OECD average, which actually decreased by -0.9% during the same period.

Lim Young-tae, Head of Employment and Social Policy at the Korea Employers Federation, emphasized, "Excessive burden on citizens for social insurance leads to a vicious cycle that suppresses employment and investment, thereby hindering national economic growth. Considering demographic changes, it is necessary to improve policy goals such as strong expenditure efficiency and establishing the principle of balanced contributions so that social insurance can be maintained within the payment capacity of the people."