Hankyung Research Institute Urges Ministry of Employment to Extend Employment Retention Subsidy Until Year-End

Proposal to Extend Employment Retention Subsidy Period for Special Employment Support Sectors
"770,000 Jobs Saved Last Year Through Employment Retention Subsidy, Extension Needed to Prevent Mass Unemployment"

[Asia Economy Reporter Kim Hyewon] The Korea Economic Research Institute announced on the 30th that it has submitted a proposal to the Ministry of Employment and Labor to extend the paid employment retention support fund period for special employment support industries until the end of this year.

The Ministry of Employment and Labor extended the paid employment retention support fund period for special employment support industries by an additional 90 days in June, extending it from the current 180 days. As a result, companies that have been receiving employment retention support funds since the beginning of this year are scheduled to have their payment period end at the end of September. From October, they will no longer be able to receive support funds, but as the spread of COVID-19 continues and employment instability increases, the Korea Economic Research Institute has proposed a further extension to the government.

The Ministry of Employment and Labor took the extension measure in June due to concerns about business damage and employment instability caused by the prolonged COVID-19 pandemic. The average number of confirmed cases in June was 554, but the average number of confirmed cases in August (1st to 25th) has reached 1,724. The vaccination rate is at 25.1% (based on full vaccination as of August 25), and social distancing and quarantine measures are expected to continue until herd immunity is achieved through 70% vaccination. Therefore, special employment support industries, which belong to face-to-face service sectors, inevitably face management difficulties.

In the case of the aviation industry, the sales of six companies in the first half of this year decreased by 46.8% compared to the first half of 2019 before COVID-19, but employment only decreased by 4.8%. The Korea Economic Research Institute diagnosed that this was largely due to the role of the employment retention support fund. However, the sales of four low-cost carriers decreased by 79.9% during the same period, indicating greater damage, so if the support fund is discontinued, it will be difficult to avoid large-scale restructuring centered on low-cost carriers.

The situation in the travel industry is even more severe. The sales of seven major travel companies in the first half of this year decreased by 74.1% compared to the first half of 2019 before COVID-19, and except for Lotte Tour Development, which expanded hiring through new hotel businesses, employment at six companies decreased by 39.7%.

According to the Ministry of Employment and Labor, about 770,000 workers were able to keep their jobs through the employment retention support fund system last year, and as of the end of May this year, about 260,000 people are receiving support.

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, emphasized, "For special employment support industries, even if the spread of COVID-19 stops, it is expected to take a long time to return to normal," and added, "Government support is needed so that the support period of the employment retention support fund, which was a great help to 770,000 workers, can be extended."

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