[Changes Next Year] Minimum Wage 8,720 Won... Expansion of Basic Pension and Employment Insurance

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] Starting next year, the eligibility for basic pension payments aimed at stabilizing the living conditions of the elderly will be expanded. Artists will be included in the mandatory coverage of employment insurance, while applications for exclusion from industrial accident insurance for special-type workers (STWs) such as delivery drivers will become more stringent.

The government published "Changes Starting from 2021" on the 28th, outlining policy and project changes effective next year.

◆ Minimum wage set at 8,720 won... Expansion of industrial accident insurance protection for STWs = From January 1 next year, the basic pension paid to seniors aged 65 and over will be expanded to a maximum of 300,000 won per month for those in the bottom 70% income bracket. This year, 300,000 won per month was paid to those in the bottom 40% income bracket, and 254,760 won to those in the 41-70% income bracket.

Next year, private companies with 30 to 299 employees will also be required to guarantee paid holidays on public holidays and substitute holidays, similar to government offices. Previously, public holidays were not statutory paid holidays for private companies, but starting this year, they are being applied as statutory paid holidays in stages depending on company size.

If employees must work on a public holiday unavoidably, the employer can designate another working day as a paid holiday through a written agreement with the employee representative.

The minimum wage for next year is set at 8,720 won per hour. Converted to a daily wage based on 8 hours, it amounts to 69,760 won, and the monthly wage based on a 40-hour workweek is 1,822,480 won.

The minimum wage applies equally to all workplaces and applies to all workers under the Labor Standards Act regardless of employment type or nationality.

During a 3-month probation period, the minimum wage can be reduced by 10%. However, for contracts less than one year or simple labor workers, the reduction cannot be applied even during probation.

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Next year, the scope of industrial accident insurance protection for STWs is expected to expand. In addition to the 14 occupations currently covered, such as insurance planners, quick service drivers, delivery drivers, and freight truck owners, freelancers working in the software industry will be newly added to the coverage starting July next year.

Also, applications for exclusion from industrial accident insurance can only be made in cases such as the worker’s illness, injury, pregnancy, childbirth, or childcare causing more than one month of leave, or business suspension of more than one month due to the employer’s fault.

Since the 10th of this month, the scope of employment insurance has been expanded to include artists. Artists who meet the eligibility requirements (at least 9 months of insured periods within the 24 months prior to job separation) will be able to receive unemployment benefits and maternity benefits.

Support for employment insurance premiums for low-income artists has also been newly introduced. For businesses with fewer than 10 employees, artists earning less than 2.2 million won per month and their employers can receive an 80% subsidy on employment insurance premiums.

◆ Job stability funds and employment retention subsidies to continue next year =Next year, job stability funds will be provided to employers with fewer than 30 employees who employ workers earning an average monthly wage of 2.19 million won or less. The support amount is 70,000 won per worker per month for businesses with fewer than 5 employees, and 50,000 won for those with 5 or more employees.

Improvements to the employment retention subsidy system will make it easier for dispatch and service contractors to receive support. Previously, dispatched and service workers working across multiple businesses with different business conditions were excluded from support due to not meeting eligibility requirements.

From January next year, if the workplace conducts paid leave or leave for its own employees, the dispatch company will not need to separately prove the inevitability of employment adjustment. The one-month reduction prevention period requirement will apply only to the relevant workers.

Additionally, the reporting period for business suspensions due to COVID-19 related assembly bans or restrictions has been extended to allow reporting within 30 days after the fact.

[Image source=Yonhap News]

The requirement of a "15% decrease in sales compared to the previous year" will also be relaxed. Businesses experiencing a continued decline in sales due to COVID-19 this year may find it difficult to meet the 15% sales decrease requirement next year to receive employment retention subsidies. Therefore, if sales have decreased by 15% or more compared to the monthly average in 2019 or the same month in 2019, the requirement will be considered met.

Companies with fewer than 10 employees are newly included in the unpaid leave support program. Such companies can receive unpaid leave support if they have exhausted the 180-day paid employment retention subsidy period.

◆ Strengthened support for persons with disabilities... Expansion of Youth Savings Account = From April 1 next year, commuting expenses of 50,000 won per month will be supported via transportation vouchers for low-wage workers with severe disabilities. This pilot project targets those with severe disabilities who have been exempted from minimum wage application and whose income is below 100% of the median income. The vouchers can be used for buses, taxis, and private vehicle fuel costs.

More youth with developmental disabilities will receive care services next year. The number of recipients for developmental disability day activity services will increase by 5,000 to 9,000, and after-school activity service recipients for youth with developmental disabilities will increase by 3,000 to 10,000.

A Ministry of Health and Welfare official stated, "The increase in service unit costs lays the foundation for providing higher quality services," and "It is expected to improve social skills for people with developmental disabilities and reduce the caregiving burden on families."

The scale and enrollment opportunities for the "Youth Savings Account," which helps working youth accumulate lump sums, will be expanded. The Youth Savings Account encourages savings among low-income working youth and supports asset formation to provide opportunities for independence.

Next year, the support scale for the Youth Savings Account will be expanded to 13,400 people (27.854 billion won), and the number of enrollment opportunities will increase from 2 to 4 times.