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'Unemployment insurance for all' takes shape


Union representatives of delivery service workers listen to a government plan to expand unemployment insurance at the National Assembly in Yeouido, Seoul, May 21. Yonhap
Union representatives of delivery service workers listen to a government plan to expand unemployment insurance at the National Assembly in Yeouido, Seoul, May 21. Yonhap

By Lee Kyung-min

The government initiative to broaden the social safety net for low-income, irregular workers is picking up speed, Friday, after the National Assembly passed a related bill to make it mandatory for artists, entertainers and writers to subscribe to the state-run unemployment insurance.

Yet criticism continues due mostly to lack of a concrete financing plan over who would pay monthly premiums and whether the government is ready to shoulder the burden amid a rapid deterioration of related funds.

The Employment Insurance fund saw a 2.8 trillion won ($2.2 billion) deficit in 2019, a steeper fall from its 808.2 billion won deficit in 2018.

The Ministry of Employment and Labor said, Thursday, the scope and extent of the insurance coverage and subscription eligibility are expected be expanded within 2020 to include those referred to as "special contract workers."

The 770,000 such workers eligible to seek industrial accident claims with Korea Workers' Compensation & Welfare Service include chauffeurs, insurance planners, marketing workers paid by the number of new loan takers they land, golf caddies, workers contracted with private education material publishers, delivery workers, messenger service workers and concrete mixer drivers.

The government views it will be easy to identify their employers, who under the current system should pay half the monthly premium, with the other half paid by the workers.

All salaried workers are required to pay 1.6 percent of their salary ― shouldered equally by the employer who pays 0.8 percent and the other half paid by the worker.

Yet self-employed and short-term contract-based workers will be brought into the system as early as early 2021, given the difficulty of identifying their income and employer, not to mention overall backlash from the group to whom the new rule would mean an "unwanted tax hike."

Most self-employed barely making ends meet file nil returns in their year-end tax settlements. A regular payment of monthly premium therefore is a considerable burden, partly explained why only some 15,000 people, or 0.38 percent of over 5.48 million self-employed are subscribed as of December 2019.

As for short-term contract-based workers, they say meeting the eligibility requirement to seek unemployment benefits is "almost impossible" because the system is designed to help those without any source of income, which they say only helps salaried workers.

To salaried workers, losing their job means no immediate source of income, making them an easily recognized beneficiary. But contract workers receiving a small amount of pay for even one-off work makes them ineligible, a reason why many of them find the subscription not "worth the trouble."

With the complex, thorny and politically divisive issue over financing left unaddressed, the government initiative will draw more backlash than support, Dankook University economist Kim Tai-gi said.

The Korean labor market, in his view, has a decades-long issue of "extreme polarization" between highly paid workers with strong job security and those pushed to work low-paid temporary irregular jobs subject to frequent layoffs.

"The unemployment insurance is intended to help hard-working employees, not to incentivize seeking government benefits while between jobs. Strengthening social welfare is all well and good but pushing for the measure without viability and sustainability concerns is bound to fail," Kim said.



Union representatives of delivery service workers listen to a government plan to expand unemployment insurance at the National Assembly in Yeouido, Seoul, May 21. Yonhap
Union representatives of delivery service workers listen to a government plan to expand unemployment insurance at the National Assembly in Yeouido, Seoul, May 21. Yonhap

By Lee Kyung-min

The government initiative to broaden the social safety net for low-income, irregular workers is picking up speed, Friday, after the National Assembly passed a related bill to make it mandatory for artists, entertainers and writers to subscribe to the state-run unemployment insurance.

Yet criticism continues due mostly to lack of a concrete financing plan over who would pay monthly premiums and whether the government is ready to shoulder the burden amid a rapid deterioration of related funds.

The Employment Insurance fund saw a 2.8 trillion won ($2.2 billion) deficit in 2019, a steeper fall from its 808.2 billion won deficit in 2018.

The Ministry of Employment and Labor said, Thursday, the scope and extent of the insurance coverage and subscription eligibility are expected be expanded within 2020 to include those referred to as "special contract workers."

The 770,000 such workers eligible to seek industrial accident claims with Korea Workers' Compensation & Welfare Service include chauffeurs, insurance planners, marketing workers paid by the number of new loan takers they land, golf caddies, workers contracted with private education material publishers, delivery workers, messenger service workers and concrete mixer drivers.

The government views it will be easy to identify their employers, who under the current system should pay half the monthly premium, with the other half paid by the workers.

All salaried workers are required to pay 1.6 percent of their salary ― shouldered equally by the employer who pays 0.8 percent and the other half paid by the worker.

Yet self-employed and short-term contract-based workers will be brought into the system as early as early 2021, given the difficulty of identifying their income and employer, not to mention overall backlash from the group to whom the new rule would mean an "unwanted tax hike."

Most self-employed barely making ends meet file nil returns in their year-end tax settlements. A regular payment of monthly premium therefore is a considerable burden, partly explained why only some 15,000 people, or 0.38 percent of over 5.48 million self-employed are subscribed as of December 2019.

As for short-term contract-based workers, they say meeting the eligibility requirement to seek unemployment benefits is "almost impossible" because the system is designed to help those without any source of income, which they say only helps salaried workers.

To salaried workers, losing their job means no immediate source of income, making them an easily recognized beneficiary. But contract workers receiving a small amount of pay for even one-off work makes them ineligible, a reason why many of them find the subscription not "worth the trouble."

With the complex, thorny and politically divisive issue over financing left unaddressed, the government initiative will draw more backlash than support, Dankook University economist Kim Tai-gi said.

The Korean labor market, in his view, has a decades-long issue of "extreme polarization" between highly paid workers with strong job security and those pushed to work low-paid temporary irregular jobs subject to frequent layoffs.

"The unemployment insurance is intended to help hard-working employees, not to incentivize seeking government benefits while between jobs. Strengthening social welfare is all well and good but pushing for the measure without viability and sustainability concerns is bound to fail," Kim said.


Lee Kyung-min lkm@koreatimes.co.kr


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