Only 10% Receive Employment Retention Subsidy... Urgent Need for Countermeasures

President Moon Orders Drastic Employment Measures

Government Official: "Job Retention" is Key

Consideration of Mandatory Enrollment and Government Support for Freelancers and Others Not Covered by Employment Insurance

Concerns Over Massive Fiscal Demand

On the 10th, unemployment benefit applicants are receiving consultations at the Western Employment Welfare Plus Center in Mapo-gu, Seoul. Photo by Mo Honam munonam@

[Asia Economy Reporters Joo Sang-don, Kim Bo-kyung (Sejong), Jang Se-hee] The measures to be announced by the government at the 5th Emergency Economic Meeting next week are expected to focus primarily on 'job retention.' On the 14th, a government official said, "In the current situation, maintaining existing jobs is more important than creating new ones," adding, "Job retention is the core of this employment policy."

President Moon Jae-in also stated the day before, "In the face of an economic crisis, the government will concentrate its policy capabilities on protecting jobs," and instructed, "The government should review the maximum possible support measures for companies maintaining employment and devise bolder and more proactive policies." This comes amid concerns that the COVID-19 pandemic is causing a real unemployment crisis, as the number of employment insurance subscribers last month was 13.76 million, an increase of only 1.9% (253,000 people) compared to the same month last year. If unemployment rises, income decreases, potentially leading to a vicious cycle culminating in a prolonged recession.

◆ Focus on 'Job Retention' = First, the government is considering further increasing the Employment Retention Subsidy as a measure to maintain current jobs. Previously, on the 25th of last month, the Ministry of Employment and Labor decided to ease eligibility requirements and increase subsidy amounts for employers facing unavoidable employment adjustments due to COVID-19 business impacts until the 'National Infectious Disease Crisis Alert' is lifted. Currently, from April to June, the subsidy level is temporarily being raised to a maximum of 90% for all industries. There is a strong possibility this rate will be increased further.

However, the related enforcement decree work has not yet been completed. First, the enforcement decree must be revised to reflect the 90% increase, followed by additional revisions to the official notice. A Ministry of Employment and Labor official said, "Since the 90% increase is already being implemented, the enforcement decree must be revised accordingly," adding, "If the rate is further increased, the official notice must also be amended."

Measures for those not enrolled in employment insurance are also urgently needed. President Moon ordered, "Please devote great effort to preparing support measures for those not enrolled in employment insurance." As of February, only 67% (13.8 million) of all wage workers (20.56 million) were enrolled in employment insurance. Thirty-three percent remain outside the safety net of employment insurance. Among 470,000 applicants for the Employment Retention Subsidy as of the 13th of this month, only 20,000 to 30,000 have received payments, less than 10% of the total. The total amount disbursed in subsidies is only 20 billion KRW. Job support centers in local districts handling subsidy consultations and applications are flooded with calls about the Employment Retention Subsidy all day long. However, many callers are freelancers or others who are not eligible for support.

◆ Urgent Measures for Employment Insurance Blind Spots = Three main options are being discussed for supporting those not covered by employment insurance: ▲ mandatory enrollment of non-enrolled individuals (requiring legal amendments), ▲ partial government support equivalent to employment insurance benefits, and ▲ direct job support.

Mandatory enrollment for non-enrolled individuals requires legal amendments, but the relevant bill is currently pending in the National Assembly's Environment and Labor Committee. The government plans to revise the 'Partial Amendment to the Employment Insurance Act,' originally proposed by Rep. Han Jeong-ae of the Democratic Party, once the next National Assembly convenes. A Ministry of Employment and Labor official said, "We expect the National Assembly to convene at least once after the election," but added, "Since the related bill is currently pending in the standing committee, it may take some time." The bill aims to extend employment insurance coverage to special-type workers and artists to ensure livelihood stability during unemployment.

Providing government budget support equivalent to employment insurance benefits would also impose a massive fiscal burden. Since the second supplementary budget is a one-point supplementary budget focused on emergency disaster relief funds, this issue was not included. A government official said, "If financial support is provided, a third supplementary budget will be inevitable," adding, "Ultimately, the government's fiscal burden will be significant."

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