[Column] The Depletion of the Employment Insurance Fund Is Only a Matter of Time

[Asia Economy Reporter Jang Sehee] The government announced a third round of disaster relief funds amounting to 9.3 trillion won on the 29th. As the number of eligible recipients and the amount of support increased, the total scale grew to more than three times the initially expected amount. This decision was based on the judgment that it is immediately important to help employment-vulnerable groups struggling due to the COVID-19 pandemic. However, concerns cannot be hidden that the exhaustion point will come sooner as some funds are being spent more than originally planned.

According to the "Tailored Damage Support Measures in Response to the Third Wave of COVID-19" jointly announced by the government on the same day, 400 billion won from the Employment Insurance Fund was included in the resources for the third disaster relief funds. The government plans to use the fund to temporarily increase the support rate for employment retention subsidies for businesses subject to gathering restrictions or bans to 90% for three months, extend unpaid leave support payments of 500,000 won per month for three months, and extend employment retention subsidies agreed upon by labor and management for one year.

The Employment Insurance Fund is a resource for unemployed individuals actively seeking jobs. Considering the nature of the support, it does not seem unreasonable to allocate resources from the fund. However, the problem lies in the excessive speed of spending. The original fund operation plan did not include using the fund for the third disaster relief funds. Additional spending requires approval from the National Assembly.

The government argues that since only 400 billion won out of the 4 trillion won fund balance is being used, there is no immediate strain on finances. However, if the COVID-19 pandemic prolongs and employment shocks worsen, depletion of the fund is only a matter of time. The average monthly expenditure on job-seeking benefits this year reaches 1 trillion won. Including vocational training (100 billion won) and employment retention subsidies (200 billion won), more than 1.5 trillion won is spent monthly. A simple calculation shows that the fund will be exhausted within four months. Last year, to stabilize the livelihoods of the unemployed, the government expanded the duration and increased the amount of unemployment benefits paid from the Employment Insurance Fund. To do this, the insurance premium rate was raised from 1.3% to 1.6%. What will be the response if the employment insurance fund is depleted? Will the insurance premium rate be raised again? It is time to establish a fund resource stabilization plan in preparation for the prolonged COVID-19 pandemic.

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