[2022 Economic Policy] Emphasizing Revitalization of 'Youth Jobs'... Laying the Groundwork for Both Safety Nets and Hiring Activation

'Up to 13 Million KRW per Person' Employment Increase Tax Credit Extended for 3 Years
Strengthening Fiscal and Tax Support... Encouraging Companies to Create 'Quality Jobs'

Smooth Employment Insurance Transition for Quick Service, Substitute Drivers, and Platform Workers
Support for Abolishing Exclusivity Requirement as an Obstacle to Industrial Accident Insurance for Platform Workers

Students preparing for employment at a university library in Seoul city. Photo by Mun Ho-nam munonam@

[Sejong=Asia Economy Reporter Moon Chaeseok] The government has decided to focus its policy efforts on creating jobs for youth next year to revive the employment market. While strengthening the national employment safety net, it plans to enhance policy support to activate youth hiring. Employment insurance will be expanded for various special employment types (special types of employment, or "teukso" in Korean) such as quick service workers (including delivery and courier drivers) and substitute drivers. Additionally, the requirement for exclusivity in industrial accident insurance will be abolished, and the corporate hiring quota for those who complete the work experience program under the National Employment Support System will be doubled.

The government announced the economic policy direction for next year on the 20th, which includes these measures. The job policy for next year will be pursued in a way that strengthens private companies' ability to create jobs and enhances employment welfare tailored to various working forms such as special employment types (teukso).

The government has identified "minimizing the scarring effects of COVID-19" as a key priority in next year's employment market policies. The scarring effect refers to a vicious cycle where a decline in growth rate weakens economic agents' confidence in growth, leading to a continued decrease in the growth rate. Below is an overview of the government's employment policy for the coming year. (Source: Ministry of Economy and Finance)

First, to enable companies to increase "quality jobs," the government will extend the application period of the "Employment Increase Tax Credit" system and the "Small and Medium Enterprise Social Insurance Premium Tax Credit" from the end of this year to the end of 2024, a three-year extension. The Employment Increase Tax Credit system provides a tax credit of 4.5 million to 13 million KRW per year per additional regular employee for three years (two years for large companies) to companies that increase employment. The SME Social Insurance Premium Tax Credit provides a tax credit for two years equal to 50% of the social insurance premiums for increased regular employees in SMEs (100% for youth and career-interrupted women, 75% for new growth service industries).

Incentives for companies hiring vulnerable employment groups and low-wage workers will be strengthened. The number of people eligible for the Employment Promotion Incentive, which provides about 7.2 million KRW annually when hiring those who have completed employment support programs or belong to vulnerable employment groups, will be more than doubled from 12,000 this year to 28,000 next year. Furthermore, to stabilize the employment environment for workers in small businesses severely affected by the COVID-19 pandemic, the job stabilization fund support period will be extended by six months from the end of this year to the end of June next year. This program provides 30,000 KRW per worker per month for six months, targeting a total of 2.53 million people.

Policies to strengthen job seekers' capabilities will be pursued simultaneously. These will be promoted in four main areas: job competency enhancement, increasing employment incentives, strengthening job matching services, and public sector support. The corporate hiring quota for internship-type work experience under the National Employment Support System will be doubled from 20% to 40% of insured employees under employment insurance. This system provides support of up to 1.82 million KRW per month for up to three months, with 40 hours per week, along with job performance experience. At the same time, a new "Early Employment Success Allowance" of 500,000 KRW will be introduced for participants in the National Employment Support System who find employment or start a business within three months, to encourage job seekers' motivation.

Public sector support will also be promoted. Among the target of 1.06 million direct job projects next year, more than 500,000 hires will be expedited by next month. Additionally, the government plans to finalize more than 75% of national public servant open recruitment by the third quarter, accelerating the execution speed compared to this year's target of over 70% during the same period.

A delivery driver is seen moving busily on Mugyo-ro, Seoul. Photo by Moon Ho-nam munonoam@

The policy of strengthening the employment safety net will be maintained. Employment insurance will be applied as planned for quick service and substitute drivers (from January) and other special employment and platform workers (from July), and discussions among labor, management, and government under the Presidential Committee on Economic, Social and Labor Affairs will be accelerated to expand coverage to self-employed workers by 2025. Platform and domestic workers will be included as new targets for social insurance premium support, with up to 80% of employment insurance premiums subsidized. The eligibility criteria for social insurance premium support for 430,000 daily workers in small businesses with frequent job changes will be relaxed. Previously, those with social insurance subscription history within one year were excluded; this will be eased to within six months.

To allow platform workers who provide labor to multiple businesses to receive industrial accident insurance, the government will push to abolish the exclusivity requirement for special employment workers under the Industrial Accident Compensation Insurance Act. Currently, the law requires that workers provide labor "mainly to one business" to be eligible for industrial accident insurance, which causes a paradox where delivery drivers and other platform workers who seek jobs from multiple places cannot properly enroll in industrial accident insurance. This issue has been raised by labor groups, and the government plans to support the prompt passage of related protective legislation through the National Assembly.