Ministry of Employment: "Special Employment and Freelancers' Monthly Income Dropped 70% Due to COVID-19... Employment Safety Net Needed"

Announcement of '1st Emergency Employment Stability Support Fund Application Status' Results
Income of Special Employment and Freelancers in Their 30s-40s Decreased by Over 70%
Female Applications Exceed Male, Higher Ratio in 40s-50s
Lee Jae-gap "Establishing a Roadmap to Eliminate Employment Insurance Blind Spots"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] Due to the spread of the novel coronavirus infection (COVID-19), the average monthly income of workers in special employment types (SETs) and freelancers has decreased by about 70%. Additionally, among the SET occupations, 'insurance planners' were the most frequent applicants for the government program that provides up to 1.5 million KRW.

The Ministry of Employment and Labor announced on the 2nd the results of an analysis of 1.756 million people who applied for the first round of emergency employment stabilization funds in June and July. The emergency employment stabilization fund program provided up to 1.5 million KRW to small business owners, SET workers, freelancers, and unpaid leave workers whose income or sales declined due to COVID-19.

'Insurance Planners' 15,000 Applicants... Highest Among SETs

Among the applicants, 587,000 (33.4%) were SET workers and freelancers. By occupation, insurance planners accounted for the largest number with 15,000 applicants (17.8%).

Next were education-related workers (103,000, 17.6%), service workers (39,000, 6.6%), sales workers (24,000, 4.1%), substitute drivers (23,000, 3.8%), door-to-door salespersons (23,000, 3.8%), and visiting teachers (11,000, 1.9%).

Education-related workers include after-school teachers, academy and sports instructors; service workers include water, gas, and electricity meter readers, caregivers, and domestic helpers; sales workers include salespersons and telemarketers.

Based on the 14 SET occupations covered by industrial accident insurance, the top five occupations were insurance planners (17.8%, 105,000), private tutors (3.9%, 23,000), substitute drivers (3.8%, 23,000), door-to-door salespersons (3.8%, 23,000), and visiting teachers (1.9%, 11,000).

Comparing the monthly income of SET and freelancer recipients before and after the COVID-19 crisis, the overall average decrease rate was 69.1%.

By age group, those in their 30s and 40s experienced a decrease of over 70%, which was higher than other age groups.

By income quintile, the lowest quintile (75.6%) had an income decrease rate about 20 percentage points higher than the sixth quintile (55.6%). In other words, the lower the income, the greater the income reduction. About half (49%) of recipients experienced an income decrease rate of 60% or more, and 30% experienced a severe income decrease of 80% or more.

Among the 14 SET occupations covered by industrial accident insurance, the occupations with the highest rates of income decrease over 60% were visiting teachers (66.2%), loan solicitors (50.3%), construction machinery operators (48.2%), substitute drivers (42.8%), and insurance planners (40.0%).

Among 500,000 SET recipients, 22% had at least one record of employment insurance enrollment in the past three years (2017?2019).

Minister of Employment and Labor Lee Jae-gap stated, "COVID-19 has clearly revealed that SET workers and freelancers are the most vulnerable groups in the labor market, falling into blind spots of the employment safety net," and emphasized, "Employment safety nets such as employment insurance are necessary for SET workers and freelancers to overcome crises like COVID-19."

The government submitted amendments to the Employment Insurance Act and the Employment Insurance Premium Collection Act to the National Assembly last September to apply employment insurance to SET workers and is pushing for approval within the year.

Small Business Owners Account for 62.5%... Higher Proportion of Women and Those in Their 40s and 50s

Regarding the emergency employment stabilization fund application status, among the total 1.756 million applicants, small business owners accounted for the largest share with 1.098 million (62.5%). Next were SET workers and freelancers with 587,000 (33.4%), and unpaid leave workers with 71,000 (4.0%).

By gender, women accounted for 939,000 and men for 817,000 overall, with women exceeding men by about 7 percentage points. By age, those in their 40s (25.6%) and 50s (28%) had the highest proportions.

Among SET workers, freelancers, and unpaid leave workers who applied for the fund, women accounted for higher proportions at 67.0% and 63%, respectively, while small business owners had a slightly higher proportion of men (54.4%).

An official from the Ministry of Employment and Labor said, "About 80% of applicants were asked for additional documentation for income verification," explaining, "This was because many applicants either lacked official income data to verify monthly income or had no official income data at all."

However, insurance planners and private tutors submitted allowance and commission payment statements issued by their companies, and among small business owners, taxi drivers submitted total sales data from taxi companies, making income verification relatively easier.

Minister Lee said, "Through this emergency fund income verification process, I deeply felt the need to establish an income tracking system to incorporate SET workers and freelancers into the employment safety net."

He added, "We plan to include specific details related to establishing an income tracking system in the roadmap to eliminate blind spots in employment insurance, to be developed by the end of the year through close cooperation with related agencies such as the Ministry of Economy and Finance and the National Tax Service."

Meanwhile, the statistical analysis results of the second round of emergency support funds, which accepted applications from December 12 to 23 last month, are expected to be announced in December.

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