Extension of Employment Retention Support Fund by 90 Days for 15 Industries Including Aviation... Up to 90% Support for Leave Allowance (Comprehensive)

Government Forecasts Prolonged 'Jobless Growth'... "Significant Time Needed for Recovery"
Minister of Employment: "Contributing to Employment Stability in Sectors Severely Affected by COVID-19"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] The government has decided to extend the policy supporting up to 90% of labor costs for employers in 15 industries, including the aviation sector, who paid workers’ leave allowances despite business suspensions and furloughs during the COVID-19 crisis, for an additional 90 days. This measure considers the severe situation where domestic low-cost carriers (LCCs) and others are preparing to implement unpaid leave in anticipation of the government support ending at the end of this month. The government deemed it inevitable to allocate more funds as the prolonged COVID-19 pandemic has caused serious business damage and employment instability in these 15 industries, and recovery is expected to take considerable time.

The Ministry of Employment and Labor held the '5th Employment Policy Deliberation Committee of 2021' and reviewed and approved a proposal to extend the paid employment retention subsidy period for 15 special employment support industries, including aviation, from 180 days to 270 days. Consequently, employers in shipbuilding, travel, tourism accommodation, tourism transportation, performance, aircraft handling, duty-free shops, exhibitions and international conferences, airport buses, film, training facilities, amusement facilities, foreigner-only casinos, aircraft parts manufacturing, and route bus industries can receive paid leave and furlough support for up to 270 days.

For example, companies that have received paid support every day since January 1st were at risk of losing support at the end of this month, but now they can continue to receive it until the end of September. The government will continue to support 90% of the leave allowance, which is about 70% of the average wage. Additionally, special employment support industries can also receive unpaid leave and furlough support for up to 270 days.

According to the Ministry of Employment and Labor, last year, support payments amounted to 2.2779 trillion KRW for 720,000 workplaces and 770,000 workers, and this year, until the end of last month, 652.4 billion KRW was provided for 36,000 workplaces and 260,000 workers. The ministry explained that thanks to these subsidies, a mass layoff crisis similar to the 1998 International Monetary Fund (IMF) foreign exchange crisis was averted. During the national crisis, bold employment retention subsidies allowed employers to endure through 'business suspensions and furloughs' rather than 'worker layoffs.' In 1998, without government support, employers faced closure crises helplessly and conducted severe restructuring, resulting in 920,000 more unemployed people than in 1997. Last year, the number increased by 45,000 compared to 2019.

However, the Ministry of Employment and Labor forecasts that the COVID-19 business damage in these 15 industries will continue for a considerable period. They expect a prolonged period of so-called 'jobless growth.' While the business damage and employment instability caused by the prolonged COVID-19 pandemic have been severe so far, recovery is also expected to take significant time.

Employment Minister Ahn Kyung-duk said, "I hope the decision to extend the employment retention subsidy period by 90 days for special employment support industries, which have been severely affected by COVID-19, will contribute to stabilizing the employment of workers in crisis," adding, "We will continue to conduct in-depth inspections of the employment situation and do our best to overcome the employment crisis."

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