Last Month's Unemployment Benefits Payment Soars 63% to 1.1 Trillion Won... Another Record High

Citizens are entering the unemployment benefits briefing room at the Seoul Employment Welfare Plus Center in Jung-gu, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Bo-kyung] Due to the employment shock caused by the COVID-19 pandemic, the number of unemployed people has increased, leading to another record high in unemployment benefit payments last month.

According to the June labor market trends announced by the Ministry of Employment and Labor on the 13th, the amount paid for job-seeking benefits last month was 1.1103 trillion won, an increase of 428.7 billion won (62.9%) compared to the same month last year. Following May, when the amount first exceeded 1 trillion won (1.0162 trillion won), the scale has further expanded.

Job-seeking benefits are allowances paid from the employment insurance fund by the government to support the job-seeking activities of unemployed individuals, accounting for the majority of unemployment benefits and commonly referred to as unemployment benefits.

The amount paid for job-seeking benefits has been breaking monthly records since February this year, when the spread of COVID-19 intensified.

Last month, new applicants for job-seeking benefits numbered 106,000, an increase of 30,000 (39.5%) compared to the same month last year. The number of recipients of job-seeking benefits last month was also a record high at 711,000.

The number of employment insurance subscribers last month was 13.871 million, an increase of 184,000 (1.3%) compared to the same month last year.

While the number of employment insurance subscribers had been increasing by 400,000 to 500,000 monthly in the second half of last year, the growth rate sharply declined from March this year due to the COVID-19 situation, with only 155,000 added in May. However, the increase last month somewhat expanded.

The increase in employment insurance subscribers last month was influenced by the service sector. The number of employment insurance subscribers in the service sector was 9.494 million, up 227,000 (2.5%) compared to the same month last year.

Among service sectors, public administration saw an increase of 50,000. This was due to the resumption of government job projects, which had been suspended due to COVID-19, focusing mainly on non-face-to-face work. Employment insurance subscribers in the education service sector also increased by 18,000 due to partial school reopenings.

However, employment insurance subscribers in the accommodation and food service industry decreased by 2,000, and the increase in the wholesale and retail trade sector was limited to 7,000. These sectors were directly hit by social distancing measures.

The number of employment insurance subscribers in the manufacturing sector last month was 3.521 million, a decrease of 59,000 (1.6%). This is the largest monthly decline in manufacturing employment insurance subscribers since January 1998 (99,500) during the International Monetary Fund (IMF) financial crisis. The decline in manufacturing subscribers has been rapidly increasing since March this year.

Looking at the changes in employment insurance subscribers by age group last month, those aged 29 and under and those in their 30s decreased by 61,000 and 59,000 respectively. This reflects the severe youth employment difficulties caused by companies postponing or halting recruitment due to the COVID-19 situation. Those aged 60 and over increased by 166,000, showing the largest growth.