Government Considers Extending 'Cheongnyeon Jaejikja Naeil Chaeum Gongje' Program Ending This Year

Support of 30 Million KRW for Asset Formation After 5 Years of Service for Young Workers
Temporary Program Introduced in 2018, Originally Scheduled to End This Year
Ministry of SMEs and Startups to Extend Program Considering COVID-19 Youth Employment Challenges
285.5 Billion KRW Budget Proposal for Next Year Submitted, Under Review by Ministry of Economy and Finance

The government is pushing to extend the ‘Youth Employee Tomorrow Savings Deduction’ program, which was initially planned to operate temporarily until the end of this year. To overcome the prolonged youth employment difficulties caused by COVID-19 and encourage long-term employment, they are considering accepting new enrollments next year as well.

According to the Ministry of SMEs and Startups on the 12th, the ministry recently submitted a related budget proposal amounting to 290 billion KRW to the Ministry of Economy and Finance to allow the Youth Employee Tomorrow Savings Deduction program to continue next year. When introduced in 2018, this program was one of the youth employment measures jointly prepared by related ministries and was planned to operate temporarily until the end of 2021.

An official from the Ministry of SMEs and Startups stated, "According to the original plan, new enrollments would not be possible from next year, but considering the COVID-19 situation and manpower shortages in small and medium enterprises, we decided to extend the program." He added, "We have currently submitted a budget proposal of 285.5 billion KRW for next year to the Ministry of Economy and Finance, and a final decision will be made around the end of this month."

The Youth Employee Tomorrow Savings Deduction is a system introduced to promote youth employment in small and medium enterprises and support asset formation. Eligible participants are young workers who have been employed at small and medium enterprises for more than six months. If a young worker pays 7.2 million KRW and the SME pays 12 million KRW over five years, the government contributes 10.8 million KRW, and the young worker who joined the deduction program receives a lump sum of 30 million KRW after five years.

More than 30,000 young workers enroll in the Youth Employee Tomorrow Savings Deduction every year, with a total of over 120,000 young workers enrolled to date. According to the National Assembly Legislative Research Office, from 2018 to May of this year, a total of 41,939 small and medium enterprises and 120,305 young workers have joined the program. The number of enrollees by year was approximately 36,000 in 2018, 37,000 in 2019, and 32,000 in 2020. About 24,000 young workers have canceled their enrollment, resulting in a retention rate of about 80%. Government support funds amounted to 2.5 billion KRW in 2018, 48.9 billion KRW in 2019, 124 billion KRW in 2020, and 81.7 billion KRW as of May 2021, totaling 257 billion KRW.

An official from the National Assembly Legislative Research Office suggested, "Considering the employment retention performance of the deduction program, it is necessary to prepare a plan to continue this support program." He added, "We must take into account the worsening employment situation for youth due to recent economic difficulties caused by COVID-19."

He also said, "Due to the program’s structure, government support funds for those who joined in 2018 will no longer be needed from next year." He predicted, "If a budget similar in scale to this year’s 315 billion KRW is secured next year, government support could also be provided for new enrollments."