Ministry of Employment Announces Legislative Notice for Special Employment Insurance Act on 8th
Submission to National Assembly in September... Possible Implementation in Early Next Year
Priority Review of 14 Occupations Covered by Industrial Accident Insurance
Companies Expected to Oppose Joint Insurance Premium Burden
Special Workers May Avoid Income Disclosure and Tax Burden
On the 22nd, the government began accepting offline applications for the 'COVID-19 Emergency Employment Stability Support Fund,' which provides 1.5 million KRW per person to special employment workers such as private tutors struggling due to the COVID-19 pandemic, freelancers, small business owners, and unpaid leave workers. Citizens are seen submitting applications in person at the Employment Welfare Plus Center in Jung-gu, Seoul. Photo by Kim Hyun-min kimhyun81@
[Asia Economy Reporter Kim Bo-kyung] Starting as early as next year, special-type workers (teukgo), such as insurance planners and substitute drivers, will also be eligible for employment insurance. If their income decreases and they quit their jobs or are laid off, they will be able to receive unemployment benefits. This marks the first step of the government's ongoing 'Universal Employment Insurance System' and is expected to serve as a social safety net for teukgo workers, whose vulnerability to unemployment shocks was revealed during the COVID-19 pandemic. However, since employers who must share the employment insurance premiums will face increased costs, opposition from the business community is anticipated.
On the 8th, the Ministry of Employment and Labor announced the legislative notice for amendments to the 'Employment Insurance Act' and the 'Act on the Collection of Employment and Industrial Accident Insurance Premiums,' which include the application of employment insurance to teukgo workers. After going through legislative review procedures, the amendment bill is expected to be submitted to the National Assembly in September. Since the enforcement date is set for six months after promulgation, it is anticipated that teukgo workers will be mandatorily covered by employment insurance as early as the first half of next year.
Joint Premium Burden... Rates Delegated to Enforcement Decree
The employment insurance benefits for teukgo workers are divided into unemployment benefits (job-seeking benefits) and maternity benefits. The unemployment insurance premiums will be jointly borne by the teukgo workers and their employers, but the specific premium rates and other details will be determined by enforcement decree. Job-seeking benefits can be received at least one year after the law takes effect. The eligibility criteria for job-seeking benefits include ▲having paid premiums for at least one year within the two years prior to the job separation date, ▲maintaining insured status for at least three months within the two years prior to the job separation date, ▲involuntary unemployment or job separation due to income reduction, and ▲actively seeking reemployment.
Key issues such as the types of occupations covered by employment insurance and premium rates will be detailed in the enforcement decree. Since the characteristics vary by occupation, the preparation process for implementing the system after the law passes is expected to be challenging. Once covered by employment insurance, the individual cannot apply for exclusion, so careful consideration is necessary. For occupations with high exclusivity (the degree to which labor is provided to a single employer), applying employment insurance is easier. Accordingly, the Ministry of Employment and Labor plans to first review 14 occupations covered by industrial accident insurance, including insurance planners, golf caddies, and substitute drivers.
"Teukgo Job Reduction Possible"... Concerns Over Side Effects
Since employers will bear the cost burden of employment insurance premiums, strong opposition from the business sector is expected. Kim Dong-wook, head of the Social Policy Division at the Korea Employers Federation, stated, "While we acknowledge the need for social protection for teukgo workers, we need to consider whether the employment insurance system should be the same as that for regular employees. Teukgo workers have employment forms closer to self-employed individuals than regular employees, so various side effects may occur in the field."
He added, "From the employer's perspective, teukgo workers are more like business partners who are free from the employer's direction and supervision, so jointly bearing employment insurance premiums may feel unfair. Some industries are burdened to the extent that they need to reconsider their business models."
Kim also pointed out that employment insurance enrollment could ironically lead to a reduction in teukgo jobs. He said, "Currently, insurance planners maintain contracts with employers regardless of performance, but if employers have to pay employment insurance premiums, those with poor performance may face the risk of dismissal. Teukgo workers themselves may also be reluctant to enroll in employment insurance because paying social insurance premiums exposes their income and increases their tax burden."
As with the application of employment insurance to artists, the fact that teukgo workers who have signed labor provision contracts are targeted and that special employment insurance provisions are applied is expected to draw criticism from labor groups. A representative from the Korean Confederation of Trade Unions stated, "Amending the law with special provisions acknowledges that teukgo workers are different from regular workers. The government must provide a clear answer on whether those who cannot prove contract formation, such as verbal agreements, will be excluded from employment insurance benefits."
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