Corona-induced Employment Crisis Approaches... "Support Funds to Be Paid Only by the End of This Month"

More than 9,000 Workplaces Awaiting Employment Retention Subsidy Application
Support Payment Requires Verification of Wage Payment and Other Facts
Employment Insurance Fund of 100.4 Billion Won Insufficient...Urgent Funding Issue
Job-Seeking Allowance Payments Reach Record High...Special Employment Types Not Protected

Asia Economy DB=Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Bo-kyung] The employment crisis triggered by the shock of the novel coronavirus infection (COVID-19) appears to be becoming a reality. Applications for employment retention subsidies from small and micro enterprises on the brink of survival have exceeded 9,000 cases, but actual payments will only be made by the end of this month. Approximately 13 million vulnerable workers who are not enrolled in employment insurance will not receive any government support at all.

According to the Ministry of Employment and Labor on the 10th, a total of 9,014 workplaces submitted employment retention action plans from January 29 to the 9th. This far exceeds the 1,514 workplaces supported last year. More than 1,000 applications are being received daily, including 1,385 cases submitted on the 9th alone. The employment retention subsidy is a program that supports labor costs when employers who face unavoidable employment adjustments due to decreased sales or production implement employment retention measures such as business suspension or leave. It is funded by the employment insurance fund paid by employers and workers. This year, the employment retention subsidy secured 100.4 billion KRW, including a recent additional 65.3 billion KRW on top of the initial 35.1 billion KRW, but considering that last year's expenditure was about 70 billion KRW, this amount is expected to be far from sufficient.

However, even this is expected to be actually paid only by the end of this month. A Ministry of Employment and Labor official explained, "Employers must implement the employment retention measures for the entire month of February as planned, and only after paying labor costs this month can they formally apply. After the review process, the execution of the employment retention subsidy will likely be possible only by the end of March."

Asia Economy DB=Photo by Hyunmin Kim kimhyun81@

To receive the employment retention subsidy, employers must submit an employment retention action plan to the employment center, carry out business suspension or leave according to the plan, pay labor costs (suspension or leave allowances) to workers, and then formally apply for the subsidy. The subsidy can only be received after verification of facts such as labor cost payments. Because of this, small and micro enterprises and small business owners struggling to operate their businesses due to the impact of COVID-19 are left frustrated. Additionally, employers who receive the employment retention subsidy cannot receive other subsidies such as the Youth Additional Employment Incentive, Employment Promotion Incentive, or Elderly Employment Extension Support simultaneously, which is another limitation.

It is also notable that last month's job-seeker allowance (unemployment benefits) payments again set a record high. The monthly payment amount reached a historic high of 781.9 billion KRW, even before the impact of COVID-19 was reflected. Since last October, policies to strengthen the employment safety net, such as extending the payment period and raising the upper and lower limits of job-seeker allowances, have been implemented, but the unexpected variable of COVID-19 has emerged. On top of that, the trend of increasing employment insurance subscribers has also slowed. The increase dropped noticeably from 500,000 last year to 300,000 this year, and the number of employment insurance subscribers in manufacturing has decreased for six consecutive months.

Special-type workers and daily workers who are not enrolled in employment insurance have been left in a government support 'blind spot.' Among approximately 26.8 million employed persons in January, 13.68 million were enrolled in employment insurance, meaning about 13 million are estimated not to be covered. These workers are excluded not only from employment retention subsidies but also from job stability funds and unemployment benefits, among other employment safety nets. A Ministry of Employment and Labor official stated, "The supplementary budget submitted to the National Assembly includes the 'COVID-19 Regional Employment Response Special Support Project.' We are encouraging each local government to create programs to support workers in blind spots such as platform workers and special-type workers."

This content was produced with the assistance of AI translation services.