South Korea will launch social discussions on compensating workers for wage losses and income gaps caused by the AI and green transitions, as part of a new social contract to share the gains from industrial restructuring. The initiative, outlined in the Basic Plan for Employment Stability during the Industrial Transition, aims to address the deepening polarization that the AI transformation could bring to the labor market.
The Ministry of Employment and Labor announced the plan Thursday, proposing that the government or an insurance fund compensate part of the wage difference for workers forced into lower-paying jobs because of industrial restructuring. Officials said the issue will be difficult to resolve in the short term, and considerable debate is expected before any system is institutionalized.
Income support and benefit-sharing
The government placed income support and benefit-sharing at the forefront of the plan because of concerns that AI could widen labor market polarization. Discussions will cover eligibility, the level of support, and funding mechanisms.
To broaden the sharing of industrial gains, the government will expand the scope of its profit-sharing system to all business-to-business transactions. It will also allow the Shared Growth Cooperation Fund to be used for transition training and employment retention for workers at partner companies.
Public investment funds and employment safety net
The government will inject an additional 600 billion won ($397.89 million) into the National Growth Fund, doubling its size to 1.2 trillion won. This public participation investment fund is designed to let the general public benefit from the gains of emerging industries.
Separately, the employment safety net will expand. An income-based employment insurance system will be introduced from 2027, gradually covering non-traditional workers such as those providing labor services. This move responds to the increasingly diverse forms of employment.
Monitoring AI's impact on jobs
A new monitoring system will detect AI-related labor market disruptions at an early stage. The government will develop a Korean AI Occupational Exposure Index (K-AIOE) using job information from the Korea Network for Occupations and Workers (KNOW). A Korean Canary Dashboard will then provide real-time data on employment changes by industry and age group for occupations with high AI exposure.
The Korean Canary Dashboard is modeled on an AI labor market analysis tool released by the Digital Economy Lab at Stanford University.
Vocational training for a million workers
The government will expand vocational training through programs such as the National Tomorrow Learning Card, supporting anyone seeking the training needed during the transition period. It plans to provide AI vocational training to more than 1 million people by 2030.
Why this matters for government professionals
South Korea's approach signals a shift toward proactive labor market policy in the face of AI disruption. For policy makers and public sector professionals, the move underscores the need to understand AI's employment effects and design equitable transition strategies. Resources like AI Learning Path for Policy Makers can help build the knowledge needed to navigate these challenges. For more on AI's role in government, see AI for Government.
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