If You Receive Unemployment Benefits More Than 3 Times in 5 Years, Benefit Amount Can Be Reduced by Up to 50%

Measures to Prevent Moral Hazard in 'Repeated Benefits'
Extension of Waiting Period for Benefits

On the 12th, job seekers continued to visit the Seoul Western Employment Welfare Plus Center in Mapo-gu, Seoul. According to the 'July Employment Trends' announced by Statistics Korea on the same day, the number of employed people last month was 27,106,000, a decrease of 277,000 compared to a year ago. This marks the fifth consecutive month of decline, the longest streak in 11 years since the global financial crisis caused an eight-month consecutive decrease from January to August 2009. Photo by Kim Hyun-min kimhyun81@

[Sejong=Asia Economy Reporter Moon Chaeseok] Going forward, the government will reduce unemployment benefits by up to 50% for individuals who repeatedly claim them. This measure aims to prevent moral hazard in the receipt of unemployment benefits.

The Ministry of Employment and Labor announced on the 9th that the Employment Insurance Committee approved an improvement plan for the employment insurance system, including this content.

The improvement plan was prepared through discussions by a task force (TF) on employment insurance system improvements, which included labor and management representatives. Based on the plan, the Ministry of Employment and Labor will draft amendments to the Employment Insurance Act and related laws and announce the legislative proposal within this month.

The plan includes provisions to gradually reduce the benefit amount starting from the third claim for those who have received unemployment benefits three or more times within five years.

Specifically, the benefit amount will be reduced by 10% on the third claim, 25% on the fourth, 40% on the fifth, and 50% from the sixth claim onward. The waiting period from qualification to receipt of unemployment benefits will also be extended.

For those who have claimed benefits three or more times within five years, the waiting period will be two weeks for the third claim and will increase to four weeks from the fourth claim onward.

However, cases where active reemployment efforts are recognized?such as reemployment before half of the unemployment benefit period has passed and working for more than 12 months?will be excluded from the count of claims.

Exceptions will also be made for individuals whose average wage before job separation is significantly low, such as below 80% of the minimum wage for that year, and for daily workers who frequently change jobs.

The count of repeated claims will be calculated only after the revised law takes effect.

The improvement plan also includes measures to increase the employment insurance premium burden on workplaces with a high number of short-term involuntary separations.

Target workplaces are those where, based on regular employees, the proportion of unemployment benefit recipients with less than 12 months of continuous service over three years is high, and where the amount of unemployment benefits paid over three years exceeds the insurance premiums collected.

Employers in these workplaces may face increased premium rates, rising from 0.8% to 1.0%, thereby increasing their financial burden.

This reflects concerns about system abuse, such as some employers encouraging workers to resign instead of taking paid leave to avoid paying paid leave allowances, thereby enabling workers to receive unemployment benefits.

Additionally, the improvement plan includes measures such as setting the minimum age for employment insurance coverage for artists and others at 15 years old.

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