Cabinet Approval for Youth Job-Seeking Support Fund of Up to 9 Million Won Per Person for One Year

Jaewon is the Employment Insurance Fund... Government "Strengthening Employment Insurance Fund Finances"

[Sejong=Asia Economy Reporter Moon Chaeseok] The government has decided to provide 750,000 KRW per month for one year per person to business owners who hire young people aged 15 to 34 as regular employees for more than six months. The funding will come from the Employment Insurance Fund. Although one in four young people are unemployed according to the expanded unemployment rate (perceived unemployment rate), concerns about the depletion of the Employment Insurance Fund are high, so controversy is expected.

The Ministry of Employment and Labor announced on the 18th that it reviewed and approved the "Special Youth Employment Incentive Plan (draft)" at the Cabinet meeting. Under this plan, small and medium-sized enterprises with five or more employees that hire young people aged 15 to 34 as regular employees and maintain their employment for more than six months, and whose total number of employees increases, will receive up to 9 million KRW per employee as support. A total of 729 billion KRW will be invested over two years to support 90,000 young people.

The Ministry explained that according to last month's employment trends released by Statistics Korea, the expanded unemployment rate is 25.1%, and the number of people facing employment difficulties reaches 1.23 million, making youth job support urgent. Since the "Youth Additional Employment Incentive," which supports 90,000 young people, is also ending at the end of this month, a new support policy is necessary.

The Ministry plans to establish detailed operational plans for the Employment Insurance Fund by next month and start accepting applications through employment centers from July. A ministry official said, "Considering the impact and urgency of COVID-19 on the youth, we will urgently promote this policy as a national project by changing the Employment Insurance Fund operation plan within this year. We will proceed so that youth support can be provided promptly as soon as the fund operation plan is changed."

Due to the COVID-19 crisis, expenditures from the Employment Insurance Fund, such as unemployment benefits and employment retention subsidies, have surged, raising concerns about fiscal soundness. Currently, about 7 trillion KRW remains. To reduce the possibility of deficits, loans from the Public Fund Management Fund will be made for two consecutive years. In the worst case, additional budget requests to the National Assembly may be made. However, the Ministry considers the possibility of supplementary budgets extremely low, considering the pace of the economy, quarantine, and employment. A ministry official explained, "During the implementation of the Special Youth Employment Incentive policy, we will strengthen finances to avoid burdening the Employment Insurance Fund, considering its financial situation."

Since the Employment Insurance Fund is being used, the policy rationale must be clear. The Ministry said this policy differs from existing youth job incentive programs such as "Youth Digital Jobs" and "Special Employment Promotion Incentives." The support condition has been raised to "regular employment for six months." Instead of six months, support will be provided for one year if conditions are met, similar to existing policies. The "9 million KRW per person" is not an excessively large amount compared to the Youth Digital Jobs program, which supports 10.8 million KRW per person (1.8 million KRW for six months), and the Special Employment Promotion Incentive, which supports 6 million KRW (1 million KRW for six months).