Unemployment Benefits Surpass 1 Trillion Won for 7 Consecutive Months: "Difficult to Predict When It Will Fall Below 1 Trillion Won"

Ministry of Employment and Labor Announces 'August Employment Administration Statistics'

Employment Insurance Subscribers Increase by 400,000... Public Administration Drops by 450,000
'Direct Hit from COVID-19' Accommodation and Food Services Down by 25,000, 16 Consecutive Months of Decline

Unemployment Benefits Exceed 1 Trillion Won for 7 Consecutive Months Since February... "Impact of COVID-19"

Kim Young-jung, Director General of Employment Policy at the Ministry of Employment and Labor, announces the 'August 2021 Labor Market Trends' based on employment administration statistics on the 13th at the briefing room of the Government Seoul Office Building. (Photo by Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] Last month, the amount paid for unemployment benefits surpassed 1 trillion won for seven consecutive months since February. The government stated that the persistent increase in unemployment benefits is related to the fourth wave of the COVID-19 pandemic and expressed caution, saying it is difficult to predict when the monthly payment amount will fall below 1 trillion won.

Number of Employment Insurance Subscribers and Trends in Increase and Decrease. (Source: Ministry of Employment and Labor)

According to the "Labor Market Trends Based on August Employment Administration Statistics" released by the Ministry of Employment and Labor on the 13th, the number of employment insurance subscribers last month was 14,436,000, an increase of 417,000 (3%) compared to the same month last year. After increasing by 324,000 compared to the same month last year in March, the increase remained above 420,000 for four months from April to July, but the rate of increase slowed down.

This is interpreted as due to a base effect from the government increasing public job projects through the supplementary budget in August last year, which caused a decrease in public sector subscribers, as well as continued sluggishness in the accommodation and food service industries due to the impact of COVID-19. Public administration subscribers stood at 437,000, down 45,000 (9.4%) compared to the same month a year ago. Regarding this, Kim Youngjoong, Director of Employment Policy at the Ministry of Employment and Labor, explained, "The biggest factor for the reduced increase this year is the base effect from the sharp increase of 133,000 in August last year compared to 2019."

Source=Ministry of Employment and Labor

The accommodation and food service sector had 648,000 subscribers, down 19,000 (-0.9%). This marked a continuous decline for 16 months (1 year and 4 months) since a decrease of 2,000 in May last year. Although the rate of decrease narrowed to a single-digit percentage three months after June and July, the figures prove that the sector is not free from the impact of COVID-19. Director Kim said, "Accommodation and food service industries are representative sectors that can be affected by the fourth wave of COVID-19," adding, "Although the decrease slightly expanded last month, it is not as large as initially feared."

The manufacturing industry, which has the largest number of subscribers, continued its growth trend due to improved domestic demand and strong exports. The Ministry of Employment and Labor explained that most sectors, including automobiles, machinery equipment, and rubber and plastics, showed improvement. Last month, 3,598,000 people were subscribed, an increase of 86,000 compared to the same month a year ago. The increase expanded from 44,000 in April, 58,000 in May, 68,000 in June, to 79,000 in July.

Source=Ministry of Employment and Labor

The amount paid for unemployment benefits has not decreased yet. It has surpassed 1 trillion won for seven consecutive months since January. Last month, the total benefit amount was 1.0371 trillion won, down 60.3 billion won (-5.5%) compared to the same month last year. After recording 1.0149 trillion won in February, it has exceeded 1 trillion won for seven consecutive months. As the increase in benefit payments weakens the financial soundness of the employment insurance fund, the government announced it will raise the employment insurance premium rate from 1.6% to 1.8%, a 0.2 percentage point increase, starting July 1 next year. However, unless the COVID-19 pandemic trend subsides, this increasing trend is expected to continue for the time being.

Director Kim said, "Looking at past trends, the amounts were 1.1583 trillion won in April, 1.0944 trillion won in June, and 1.0371 trillion won in August, showing a decreasing trend, so it is possible that the amount could fall below 1 trillion won as early as this month," but added, "Because there are various variables including the fourth wave of COVID-19, it is difficult to definitively say that it will fall below 1 trillion won starting next month."

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