PSPD in English Socio-Economic 2010-09-01   1212

Must Not delay the expansion of an employment safety net

<Press Conference Statement>


Must Not delay the expansion of an employment safety net


The government and the National Assembly should expand the unemployment benefits, introduce the employment promotion benefits, and reduce four major social insurances fees.


In 2008, financial, economic and public welfare crisis from the US revealed the shabbiness and vulnerability of social and economic structures and a social safety net in South Korea. Although the number of the actual unemployed rose to about 4 millions, and the unemployment rate was a record high in last 10 years, it is difficult to find a proper solution to an unemployment problem. Economic recession threatened the job market without any buffer zone, so the underprivileged workers, such as younger generations, small business owners, temporary employees, day workers, and female temporary workers, had to suffer from a vicious circle of unemployment and poverty. Despite current superficial improvement of the economic index, many have suffered from a fear of chronic unemployment and poverty because of continuation of ‘the economic progress without employment’ lasted for the past 10 years.

Nonetheless, the Employment Insurance System, which is a crucial aspect of the employment safety net in South Korea, has revealed its limits on managing the risk of unemployment. The biggest problem is that the system’s dead zone is too extensive. According to the Korea Labor Institute, a ratio of people who receives the unemployment benefits to the total unemployed is only 11.3%, and most of the unemployed have not received their unemployment benefits for reasons such as lack of an employment insurance (45.0%), inadequate reasons for changing an occupation(22.9%), unsatisfactory period of insured units (11.1%). The Employment Insurance System is for all wage earners as states in law, but low wage earners cannot join an employment insurance since they cannot afford the fee, and also the newly unemployed (the young unemployed), long-term unemployed, temporary unemployed workers, small business owners are ineligible for employment insurances. With the exception of a dead zone problem, unnecessarily complicated qualifications for receiving benefits, where workers have to join the insurance at least for 180 days to receive unemployment benefits and ‘the voluntary unemployed’ are not qualified for assistance, obstruct its own function.


The Korean society has already entered into a high unemployment society as various indicators show, and the risk of unemployment and poverty is being structured. In this reality, to minimize the risk of unemployment and poverty, it cannot be put off any longer to establish a foundation of an employment safety net. Therefore, labor and civil organizations demand the following comprehensive reform of the Employment Insurance System:


First, the qualifications for receiving unemployment benefits should be eased. In order to currently receive unemployment benefits, the insured must meet the requirement that an insurance fee must have been paid within 180 days during 18-month work before changing an occupation. Yet, this requirement is difficult to be satisfied because of a increasing number of an unemployment in temporary irregular workers. Therefore, the requirement must be eased for the insured. Also, the function of a livelihood security for the unemployed should be strengthened by extending the duration of receipt of unemployment benefits. 

Secondly, one of the reasons for a low beneficiary ratio of unemployment benefits is because an existing law prohibits the payment of unemployment benefits for the voluntary unemployed. However, in foreign cases, the unemployment benefits are paid even to most voluntary unemployed based on the premise of actively searching for employment and engaged in job training with 3~4 months of a grace period. Likewise, in Korea, the unemployment benefits must be paid to the voluntary unemployed based on conditions of active job search and training with a grace period. This is an urgent matter because it is common in our society that changing occupation which looks like voluntary, but is actually forced against one’s will.

Thirdly, the young unemployed, small business owners, long-term unemployed are suffering from not being socially protected as well as those employed by being excepted from the employment insurance objects even though they are the biggest victims of economic crisis. The young unemployed, small business owners who closed their businesses and the involuntary long-term unemployed excluded from employment insurance objects, should be supported to maintain at least their livelihood during a job-searching period by introducing the employment promotion benefits (unemployment benefits).


Finally, the low wage workers and small business owners who did not join an employment insurance should be included in a current employment insurance system by reducing a social insurance fee for the low wage earners. The low wage workers, who experience an incomplete employment and unemployment repeatedly, are in need of a social protection but excluded from joining a social insurance due to the burden of insurance fee. This vulnerable group being unable to join a social insurance causes not only an income cut-off and an old age income instability when they are unemployed, but also becomes a problem of being excluded from a labor market. They have to be included in the scope of a labor market policy and a social safety net by reducing the social insurance fee.


As an unemployment rate increased during this economic crisis, the National Assembly submitted several bills to expand the employment insurance and introduce the employment promotion benefits (unemployment benefits) since last year, however, a practical discussion is at a standstill. The need of expanding the employment safety net cannot be denied any more, as our society had gone through an economic and public welfare crisis, and also became an urgent task which cannot be delayed any longer. If the government and the ruling party recognize a seriousness of a high unemployment problem, they have to process bills on an unemployment welfare net and an employment safety net in this session of the National Assembly not just mentioning a common people policy or a job creation. Also, they must aggressively allocate and execute the budget on unemployment and jobs with the title of a world top 10 economic superpower that executes the budget of more than 300 trillion won. Moreover, the government party must take an internal and external criticisms that ‘South Korea is an economic superpower but its unemployment and employment welfare is a toddler level’. Expanding the employment insurance and introducing the employment benefits are going to be touchstones that confirm a veracity of people-friendly policies. We appeal to start a discussion on expanding the employment insurance and introducing the employment promotion benefits in this regular session of the National Assembly without a delay.


1 September 2010

Solidarity Conference
for Expanding Employment Benefits and Introducing Unemployment Benefits

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