Government Provides Employment Subsidies to Only 16% of U-Turn Companies

Ministry of Industry and Employment System Confusion... Mandatory New Hiring for Support
"Temporary Employment Subsidy Support for Small U-Turn Companies Without New Hiring"

Panoramic view of Banwol National Industrial Complex. (Photo by Asia Economy DB)

[Asia Economy Reporter Moon Chaeseok] It has been revealed that the government provided employment subsidies to only 16% of the returnee companies that relocated their production facilities abroad and then returned to Korea.

According to data received on the 22nd from the Ministry of Trade, Industry and Energy by Kang Ki-yoon, a member of the Future United Party, since the enactment of the so-called 'Returnee Company Support Act (Act on Supporting the Return of Overseas-Expanded Companies to Korea)' in December 2013 until this month, the government has provided employment subsidies amounting to 3.11 billion KRW to only 11 companies, which is 15.5% of 71 returnee companies.

Assemblyman Kang pointed out that the poor performance of government support is due to institutional confusion between ministries. Article 11 of the Enforcement Decree of the Returnee Company Support Act states that 'employment subsidies may be provided.' Funding support can only be restricted to companies belonging to mutual investment-restricted corporate groups (with total assets of 10 trillion KRW or more) under the Monopoly Regulation and Fair Trade Act.

However, the government has been providing substitute support through the Ministry of Employment and Labor's 'Employment Creation Incentive' instead of the Ministry of Trade, Industry and Energy's 'Employment Subsidy (subsidy).' Assemblyman Kang claims that the funds the government has supported to returnee companies were only called subsidies in name but were actually incentives.

The problem is that according to the Ministry of Employment and Labor's notice, returnee companies must hire new employees to receive incentives after returning to Korea. Transferring existing employees is not allowed. According to the regulations, returnee companies find it difficult enough to make new investments in land or facilities after returning to Korea, yet they must also hire additional people. For this reason, Assemblyman Kang pointed out that returnee companies are effectively giving up on employment subsidies.

Assemblyman Kang said, "Although the Enforcement Decree of the Returnee Company Act stipulates that employment subsidies can be provided, there are no subordinate delegated administrative rules such as support criteria notices, so support is provided under the incentive administrative rules of the Employment Insurance Act under the Ministry of Employment and Labor, not under the administrative rules of the Returnee Company Act under the Ministry of Trade, Industry and Energy." He added, "The absence of detailed administrative rules from the Ministry of Trade, Industry and Energy proves that the government's support policy for returnee companies is merely for show."

He continued, "Considering the circumstances of returnee companies that bear many risks such as initial investment costs when returning to Korea, relatively small companies should be allowed to receive employment subsidies temporarily without hiring new employees until their domestic management stabilizes."

[Image source=Yonhap News]

Assemblyman Kang also argued that the National Assembly should amend the Enforcement Decree to allow the government to delegate detailed support contents and criteria for returnee companies to the administrative rules of the Ministry of Trade, Industry and Energy. This is because Article 12 of the Returnee Company Support Act delegates authority to the government to provide various financial supports to returnee companies through the Enforcement Decree.

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