Employment Retention Subsidy Increased to 90% for All Industries... Budget Raised from 100 Billion to 500 Billion Won

Ministry of Employment and Labor Announces Support Expansion Plan... Daily Limit Remains 66,000 Won

[Sejong=Asia Economy Reporters Kim Hyun-jung, Jang Se-hee] The government is expanding the scope of the Employment Retention Subsidy, which pays up to 90% of the leave allowance to companies affected by the novel coronavirus infection (COVID-19), from certain industries such as travel and tourism to all industries. Considering the rapid increase in applicants and the need for support, the related budget has also been significantly increased from the existing 100.4 billion won to 500.4 billion won.

The Ministry of Employment and Labor announced on the 25th that, to encourage companies affected by COVID-19 to actively maintain employment, the level of Employment Retention Subsidy support will be temporarily raised to up to 90% for all industries for three months from April to June this year. This measure reflects the opinions from the field, including small business owners and SMEs, who still find it difficult to bear the 25% self-pay portion of the leave allowance despite the government's adjustment of subsidy requirements and levels in response to the spread of COVID-19. In particular, related discussions accelerated after President Moon Jae-in personally ordered the expansion of the Employment Retention Subsidy at the 2nd Emergency Economic Meeting held at the Blue House the day before.

Until now, companies that could receive support for up to 90% of the leave allowance paid to workers were limited to special employment support industries designated by the government, such as travel, tourism accommodation, tourism transportation, and performance industries, while other industries received only up to three-quarters. However, with this government measure, all priority support companies such as SMEs can receive support at the same rate (90%) as the special employment support industries. For example, if a worker at a priority support company who was earning 2 million won per month takes leave due to the impact of COVID-19, they can receive 1.4 million won in leave allowance. The government’s support amount will increase from the current 1.05 million won to 1.26 million won, and the company’s burden will decrease from 350,000 won to 140,000 won.

Additionally, large companies will continue to receive two-thirds support, but if the number of leave workers exceeds 50%, support can be increased up to three-quarters. Even for priority support companies, the daily support limit will not increase from the existing 66,000 won.

The budget for subsidy payments has also been increased from 100.4 billion won to 500.4 billion won. The budget increase can be made by only going through the employment insurance fund operation plan amendment procedure. Initially, the government planned a related budget of 100 billion won based on about 70,000 workers, but as of the 24th, the number of applicant workplaces is 19,441, and the number of workers is 158,481, more than double the expected figure.

Actual subsidy payments under this measure are expected to be possible from May. If the employer has maintained employment retention measures continuously from March 1, they can receive three-quarters of the leave allowance for March and 90% for April, but the actual payment for April will be made in May. Although there are criticisms that the measure is too late given the current difficulties, the increase in subsidy payment levels requires an amendment to the Enforcement Decree of the Employment Insurance Act, causing some delay in the payment schedule.

The Employment Retention Subsidy is available without exception even to small workplaces with fewer than five employees, but the workplace must be enrolled in employment insurance. If a company receives the subsidy but actually makes employees work or obtains the subsidy through false or fraudulent means, they will face disadvantages such as additional collection up to five times the amount.

To receive the Employment Retention Subsidy, a plan for employment retention measures must be submitted to the employment insurance website or the local employment center by the day before the leave or furlough measure, and after implementation, a separate application must be submitted.

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