Unemployment Benefits Reach 1 Trillion Won Monthly Amid Realization of Qualitative Deterioration

Qualitative Decline in Jobs under Moon Administration
Minimum Wage Increase... Rise in Unemployment
Employment Insurance Rate to Increase Next Year
Greater Burden on All Workers

A security office at an apartment in Seongdong-gu, Seoul. Photo by Mun Ho-nam munonam@

[Sejong=Asia Economy Reporter Moon Chaeseok] The increase in the proportion of employment insurance subscribers among simple job workers under the Moon Jae-in administration is the result of policies focused on direct jobs. Employment insurance is a social insurance subscribed to during employment to prepare for unemployment and is considered an indicator revealing employment status. The current government has launched tens of thousands of job creation projects annually, such as public work and work experience programs, but due to various regulations, the increase in quality jobs is relatively low.

Looking at the status of employment insurance payments, it is possible to confirm not only the qualitative deterioration of jobs but also that this structure is adversely affecting the employment insurance fund. The rate of increase in unemployment (job-seeking) benefit payments for simple occupation workers is also steeper than for other occupations. In particular, the government has announced plans to raise the employment insurance rate from the second half of next year, and if the employment proportion focused on simple labor jobs increases further, the instability of the employment insurance fund is likely to continue.

According to the 'Employment Insurance Statistics by Occupation' data received on the 13th by Rep. Choo Kyung-ho of the People Power Party from the Ministry of Employment and Labor, the amount of job-seeking benefits paid in July in industries with a large number of simple labor workers such as 'beauty, travel, accommodation, food service, security, and cleaning' steadily increased from 595 billion won in 2017 to 736.7 billion won in 2018, 971.7 billion won in 2019, 1.713 trillion won last year, and 1.2384 trillion won this year. The decrease compared to July last year is 27.7%. On the other hand, in industries with many professionals such as 'management, office work, finance, and insurance,' the amount increased from 1.7555 trillion won in 2017 to 2.1967 trillion won in 2018, 2.6756 trillion won in 2019, and 3.6646 trillion won, but dropped to 2.2417 trillion won this year, a 38.5% decrease from the previous year. A Ministry of Employment and Labor official explained, "There are relatively many simple labor workers in these industries, so the damage caused by COVID-19 seems to be relatively greater than in other industries," adding, "This has led to an increase in unemployment benefit recipients."

However, since unemployment benefit payments steadily increased even before COVID-19, it is difficult to attribute the responsibility solely to the pandemic. It is more reasonable to see that the number of job-seeking benefit recipients steadily increased from the early days of the Moon administration due to the freezing of the labor market centered on simple labor occupations. The burden of the minimum wage, which surged from around 6,000 won to 9,000 won at the beginning of the administration in industries with many small businesses, also significantly contributed to the increase in unemployed persons.

As unemployment benefits for simple labor workers increase, the overall burden on workers inevitably grows. According to the 'Labor Market Trends in July 2021 Based on Employment Administration Statistics' recently announced by the Ministry of Employment and Labor, the total amount of unemployment benefits (job-seeking benefits) paid from January to July this year from the employment insurance fund was 7.5236 trillion won. This averages to 1.0748 trillion won per month.

Choi Young-ki, former director of the Korea Labor Institute, said, "There are many small businesses in industries such as cleaning and security, and since the minimum wage rapidly increased after 2017, the government began supporting job stability funds, but the support condition was 'employment insurance subscription.'" He added, "From the perspective of small business owners, they had to bear the increased minimum wage and also receive stability fund support, so they had no choice but to increase employment insurance subscriptions." He further pointed out, "Due to the nature of these industries, frequent unemployment led subscribers to become potential benefit recipients."

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