Employment Incentive Fraud Amounts to 9.8 Billion KRW from January to April This Year... 80% of Last Year's Level

Increase in Fraudulent Claims Due to COVID-19 Crisis
Voluntary Reporting Period Until the 30th of Next Month

Ministry of Employment and Labor. / Photo by Hyunmin Kim kimhyun81@

[Sejong=Asia Economy Reporter Moon Chaeseok] As the employment market froze due to the spread of COVID-19, the government’s policy to expand the payment of employment retention support funds has led to a sharp increase in related fraudulent claims.

According to the Ministry of Employment and Labor on the 17th, the amount of fraudulent claims for 15 employment incentives, including employment retention support funds, from January to April this year was estimated at 9.8 billion KRW. Employment incentives are payments made by the government to employers to support employment retention, with employment retention support funds, additional youth employment incentives, and Tomorrow Filling Deduction (Naeil Chaeum Gongje) being representative examples. Last year, the amount of fraudulent claims for employment incentives was 12.2 billion KRW. In just four months this year, the fraudulent claims have reached 80% of last year’s total.

The amount of fraudulent claims for employment incentives has been sharply increasing every year, with 2.4 billion KRW in 2018 and 7.5 billion KRW in 2019. The number of detected fraudulent cases has also surged, with 292 cases in 2018, 965 cases in 2019, 978 cases last year, and 665 cases from January to April this year.

The increase in fraudulent claims is a result of the significant rise in employment incentive payments due to the COVID-19 crisis. The amount paid for employment retention support funds from the employment insurance fund was only 66.9 billion KRW in 2019, but it soared to 2.2779 trillion KRW (34 times) last year.

Employment retention support funds are targeted at employers who maintain employment through temporary closure or leave, but some employers commit fraud by only appearing to have temporary closure or leave on paper while actually having employees work. The Ministry of Employment and Labor imposes strict penalties, including additional charges up to five times the amount of fraudulent claims when detected.

To block fraudulent claims for employment incentives, the Ministry has designated the period from the 21st of this month to the 30th of next month as a voluntary reporting period for fraudulent claims. Employers who voluntarily report fraudulent claims during this period will only be required to repay the fraudulent amount without additional charges.

The restriction period for support payments due to fraudulent claims will also be reduced, and criminal penalties will be mitigated as much as possible in consultation with the prosecution. Reports of fraudulent claims are also accepted through nationwide employment centers and the Employment Insurance Fraud Reporting Center. Informants reporting fraudulent claims will receive rewards of up to 30 million KRW.