Unemployment Benefits Exceed 1 Trillion Won... Employment Insurance Fund Expected to Worsen

Employment Insurance Contribution Rate Raised from 1.3% to 1.6%
But Last Year's Employment Insurance Fund Reserves Plummeted to 7.8301 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] A job crisis is looming due to the prolonged COVID-19 pandemic. Last month, the amount paid for job-seeking benefits (unemployment benefits) surpassed 1 trillion won, marking an all-time high. As the number of unemployment benefit applicants increases, there are concerns that the financial status of the Employment Insurance Fund will further deteriorate.

According to government departments on the 27th, the amount paid in unemployment benefits last month reached 1.0162 trillion won, with 678,000 beneficiaries. The worsening business conditions due to COVID-19 have led to more people losing their jobs. The number of people receiving unemployment benefits has steadily increased from 490,900 in January to 536,000 in February, 608,000 in March, 651,000 in April, and 678,000 in May.

In response, Kwon Ki-seop, Director of Employment Policy at the Ministry of Labor, explained, "The increase in the amount of job-seeking benefits is seen as a combination of strengthened coverage and an increase in new applicants."

Job-seeking benefits are paid from the unemployment benefits account of the Employment Insurance Fund. The fund’s reserves peaked at 10.1368 trillion won in October 2017 but have continuously decreased to 7.8301 trillion won last year.

Although the government raised the employment insurance premium rate by 23.1%, from 1.3% to 1.6% in September last year, there are concerns that it is difficult to cope with the growing unemployment benefits.

An official from the Ministry of Employment and Labor stated, "Expenditures from the Employment Insurance Fund have increased due to COVID-19," adding, "If the situation worsens further, in-depth discussions on managing the Employment Insurance Fund will be necessary."

The future looks even more problematic. If companies face difficulties due to the COVID-19 crisis, there is a possibility of a surge in unemployment benefit applicants. According to an analysis of the revised Employment Insurance Fund operation plan submitted by the National Assembly Budget Office at the request of Song Eon-seok, a member of the United Future Party, the Employment Insurance Fund deficit this year is estimated at 3.7981 trillion won. This is 100.1 billion won more than the government initially expected when pushing for the passage of the third supplementary budget.

Based on the third supplementary budget, the government projected this year’s Employment Insurance Fund revenue at 17.7748 trillion won and expenditures at 21.4628 trillion won. The deficit was expected to be 3.688 trillion won, with reserves at 3.6652 trillion won.

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