Employment Retention Subsidy Requirements Eased for Aviation and Plastics Sectors Amid Surging Oil and Raw Material Prices

Amid growing employment instability in the industrial sector due to the aftermath of the Middle East war, the government has expanded the scope of eased eligibility requirements for employment retention subsidies to include the aviation and plastics industries.

On May 5, the Ministry of Employment and Labor announced that it would relax the sales decline requirement for employment retention subsidies in order to proactively respond to the employment crisis in the air transportation industry and the rubber and plastic manufacturing industry.

The employment retention subsidy is a system in which the government provides partial support for allowances paid by employers who, due to managerial difficulties, must adjust their workforce but choose to implement employment retention measures such as temporary suspension of work or leave, rather than layoffs.

Previously, since April 13, the Ministry has supported businesses in the petroleum product manufacturing industry and chemical and chemical product manufacturing industry that had been directly impacted by disruptions in crude oil supply, even if they did not meet the sales decline requirement, provided that the head of the employment security agency determined that workforce adjustments were inevitable due to worsening industry conditions.

This measure is a follow-up response reflecting requests raised at a recent meeting with the aviation and tourism sectors. The aviation industry expressed concern that a sharp increase in oil prices has increased costs, and that if route reductions continue due to prolonged war, workforce adjustments will be unavoidable. In reality, jet fuel prices surged from $89.03 per barrel in February to a monthly average of $194.49 in March, and to a weekly average of $216.44 in the second week of last month.

The rubber and plastics manufacturing industry is also experiencing increased management burden due to difficulties in securing naphtha, a key raw material, and rising prices. The price of high-density polyethylene, used as a material for volume-based waste bags, rose from KRW 1.3 million–1.4 million per ton in February to KRW 1.55 million–1.6 million in March, and to KRW 2.2 million–2.4 million last month.

In addition, this eased requirement will be expanded to include not only the existing eligible industries—petroleum product manufacturing, chemical and chemical product manufacturing, air transportation, and rubber and plastic manufacturing—but also employers whose sales from transactions with these industries account for 50% or more of their total revenue.

Minister of Employment and Labor Kim Young-hoon stated, "Taking into account the situation in the Middle East, we will continue on-site inspections and collect industry feedback to ensure that companies facing employment crises receive timely support."

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