IMF "Non-regular Job New Deal Needed... Direct Hit from COVID-19"

"Risk of Income Collapse Due to Lack of Social Security Benefits"
"Over 5% Decline in Jobs for Low-Education Groups in 5 Years"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] As the novel coronavirus infection (COVID-19) spreads, there are growing calls for a 'New Deal' for informal workers such as temporary and short-term employees.

Lee Chang-yong, Director of the Asia and Pacific Department at the International Monetary Fund (IMF), and others recently stated in a blog post titled "New Deal for Asia's Informal Workers" that "informal workers, who are outside the scope of taxes and regulations and do not receive social security benefits, face the risk of income collapse due to the spread of COVID-19."

Director Lee analyzed, "It is almost impossible to protect them by increasing unemployment benefits, reducing income taxes, or extending paid sick leave." Most informal workers and self-employed individuals find it difficult to maintain their households once their income stops. He also pointed out that their savings are at a very low level, which is another risk factor. Employment shocks to vulnerable groups during the pandemic have been shown to be much greater. In another IMF article, it was noted that while the employment of highly educated people was hardly affected during the epidemic, jobs of those with basic education levels decreased by more than 5% after five years.

According to a survey by the International Labour Organization (ILO), as of 2018, the proportion of informal workers in South Korea reached 31.5%, and in the non-agricultural sector alone, it was about 28.8%. When divided into agriculture, industry, and service sectors, the informal employment rate in the service sector was 30.7%, higher than the industrial sector's 24.3%. However, South Korea's informal employment rate is relatively low compared to other Asian countries. Myanmar and Cambodia have informal employment rates reaching 80%, and the Asia-Pacific regional average is around 60%.

Director Lee added, "Policy responses must be delivered quickly to informal workers and their families to prevent them from falling into poverty," and "Although Asian countries are implementing various measures, more is needed considering the magnitude of the shock." He also emphasized the need for a 'New Deal' for informal workers, proposing ▲ the establishment of citizen identification systems using IT technologies such as biometric systems ▲ expansion of public health facilities and investment in effective public health responses ▲ expansion of educational services utilizing digital platforms.

However, he stressed that providing cash support to everyone should be done cautiously and efficiently. He said, "Universal cash transfers should be relaxed with the goal of ensuring appropriate support for the most vulnerable groups," and "Informal workers should be integrated into the social safety net while also improving their productivity."

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