Employment Minister: "Due to COVID-19 Situation, Raising Employment Insurance Premium Rates Is Difficult"…Suggests Slowing Down

Online Press Conference

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] On the 24th, Lee Jae-gap, Minister of Employment and Labor, said regarding the proposed increase in employment insurance premium rates, "In this situation where all classes are struggling due to the COVID-19 pandemic, it is difficult to raise the rates," and added, "The timing for discussing the rate increase should be decided while observing the economic situation." This appears to indicate that the government is signaling a slowdown in the pace of the rate hike amid concerns that an increase is inevitable due to the depletion of the employment insurance fund.

Minister Lee made these remarks during an online and offline press briefing held at the Government Complex Sejong in the afternoon, in response to a question about the timing of the premium rate increase. The employment insurance fund has been running a deficit for several years, and with the government planning to include special-type workers in employment insurance starting July this year, there are negative forecasts that the deficit will accelerate. Minister Lee acknowledged this by saying, "Because of COVID-19, there is no class that is not struggling, so the demand for employment insurance fund expenditures is increasing, and the financial situation is very poor."

However, considering the economic difficulties caused by COVID-19, the government is expected to take a cautious approach to raising the premium rates for now and instead prepare financial soundness measures through business restructuring within the first half of the year.

Minister Lee stated, "We will prepare measures to restore the financial soundness of the employment insurance fund within the first half of this year," and added, "There are issues such as transferring resources for expenditures like maternity protection benefits, which are of a general accounting nature, and unnecessary projects require expenditure restructuring." He further said, "We need to gather opinions from labor and management, including institutional improvements regarding repeated claims for unemployment benefits."

The employment insurance fund is expected to record a deficit of several trillion won last year. Regarding this, Minister Lee said, "Less employment retention support funds were used than initially expected, so additional reserves were accumulated," and reiterated, "There is still a reserve surplus this year, so there is no immediate need to raise the premium rates."

When asked about the possibility of extending the grace period for the 52-hour workweek system, which will be expanded to workplaces with '5 or more employees' starting July 1, he said, "There has been a long period of three years since the law was enacted, and the legislative work on the flexible working hours system, which can be considered a supplementary law, has been completed," and added, "I believe that workplaces with fewer than 50 employees can sufficiently adapt with the current flexible working hours system and the special extended working hours approval system."

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