250 Billion Won Support for Joint Welfare Fund to Reduce Welfare Gap Between Primary and Subcontractors

Ministry of Employment Holds '2021 1st Joint Welfare Fund Review Committee'
1,106 SMEs and 180,000 Workers Benefit from Fund Support Projects

No Public Institution Participation Noted... "Recommend Using Subsidiary Internal Funds"

Ministry of Employment and Labor building. (Photo by Asia Economy DB)

[Sejong=Asia Economy Reporter Moon Chaeseok] The government announced that it will provide 25 billion KRW in support related to the 'Joint Employee Welfare Fund,' a fund jointly established by primary and subcontracting companies to be used for employee welfare.

The Ministry of Employment and Labor and the Korea Workers' Compensation and Welfare Service recently held the '2021 1st Joint Welfare Fund Review Committee' and announced on the 14th that they plan to support 174 funds with 25 billion KRW. Accordingly, 180,000 workers from 1,106 small and medium-sized enterprises participating in the joint fund are expected to receive support for tuition and medical expenses.

Welfare funds at the individual company level had limitations in that gaps could occur between large and small-medium enterprises. In response, since January 2016, the government has encouraged the reduction of welfare gaps between primary and subcontractors by allowing two or more employers to jointly establish funds. Over five years, 20.2 billion KRW was supported, but this year, a related budget of 29.2 billion KRW was allocated, with most of it, 25 billion KRW, to be invested in the fund.

Joint Welfare Fund Support Performance. (Data=Ministry of Employment and Labor)

The Ministry of Employment and Labor emphasized that workers in the shipbuilding industry will particularly benefit. It contributed to promoting the reemployment of skilled workers on site. Additionally, it explained that fund establishment achievements are expanding in industries such as aircraft parts and elevator manufacturing. A ministry official said, "We plan to continue supporting the establishment of joint welfare funds and providing financial support to spread a culture of win-win cooperation, resolve polarization, and support job creation and industrial competitiveness enhancement."

So far, the ministry has strengthened fund support by ▲raising the matching support rate from 50% to up to 100%, ▲extending the matching support period from 3 years to up to 5 years, and ▲increasing the contribution from participating employers from 200 million KRW to up to 2 billion KRW, and from primary contractors from 200 million KRW to 1 billion KRW. As a result, the number of fund establishments, which had been below 20 annually, increased to 182 last year and reached 86 by August this year, the ministry reported. It also noted that local governments are promoting regional economic revitalization by linking joint welfare funds with 'win-win regional job projects' and other initiatives.

Support details of the Joint Welfare Fund. (Data provided by the Ministry of Employment and Labor)

However, it is also true that there are criticisms regarding the insufficient participation of public institutions in the fund. As of this year, there are no public institutions among the 1,106 participating organizations. A ministry official explained, "It is difficult for the government to force public institutions to create funds," adding, "Instead, we are recommending that subsidiaries established during the regularization process of non-regular workers in public institutions utilize in-house funds to improve the welfare of subsidiary workers."

The Ministry of Employment and Labor and the Korea Workers' Compensation and Welfare Service announced that they plan to receive second-round support applications by the end of next month and provide additional support within the budget limit. Detailed information about the second-round support application can be found on the Welfare Net of the Korea Workers' Compensation and Welfare Service.

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