ous shortcomings of the original Korean UI program. The program has been modified to improve its effectiveness but remains relatively modest in scale. Despite the extension of coverage to small firms, easier qualification requirements, and increases in potential duration, the program continues to serve a small share (less than 20 percent) of the unemployed. Concerns about disincentive effects of UI benefit payments continue to be reflected in program statutes and administrative requirements affecting eligibility.
It seems that UC programs are likely to remain small scale not only in Korea but also in other Asian countries. The limited penetration of the PES into the labor market will reinforce this tendency. Finally, the comparatively small share of wage and salary employment within the overall employment total in most Asian countries would also operate to restrict the scale of UC programs. More discussion of UC coverage is given in Chapter 8.
Based on LFS unemployment rates, UC would appear to be quite affordable for most countries in the region. Labor force surveys typically show low to moderate unemployment rates, for example, 10 of 14 countries below 6.0 percent in 2000—2001. Also, recall from Chapter 2, the generally small response of employment to changes in real GDP in Asia. This would suggest that unemployment and UC benefit payments would exhibit less cyclical volatility for a given change in real GDP relative to a similar change in the OECD-20 countries. Interest in adopting and expanding the scope of UC programs may grow, however, if Asian unemployment rates continue to increase as is suggested by the data presented in Tables 6.1 and 6.2.