KDI "Limitations of Employment Safety Net for Self-Employed Due to COVID-19... Need to Strengthen Unemployment Assistance"

Strengthening the National Employment Support System... Need to Extend Unemployment Assistance Period and Relax Income and Asset Criteria

[Asia Economy Sejong=Reporter Kwon Haeyoung] A national policy research institute has argued that the Korean-style unemployment assistance program, the National Employment Support System, should be strengthened for self-employed individuals affected by the COVID-19 outbreak. The need to expand the unemployment assistance benefit period and relax income and asset criteria to eliminate blind spots was also raised.

The Korea Development Institute (KDI) announced a report titled "Direction for Establishing an Employment Safety Net Inclusive of the Self-Employed" on the 26th, containing these points.

KDI diagnosed, "Since the COVID-19 crisis, existing job-seeking benefits and employment retention support, which were mainly designed for regular wage workers, have failed to cover non-regular workers, special employment types, freelancers, and small-scale self-employed individuals," adding, "When these groups experienced job loss and income shocks, sufficient social protection was not provided, clearly revealing the limitations of the existing employment safety net."

In particular, it pointed out the need to prepare support measures for those who involuntarily continue self-employment after their 50s. KDI stated, "In the case of solo self-employed individuals, the persistence of self-employment is high after the age of 50, and the low possibility of reemployment as wage workers plays an important role," emphasizing, "There is a need to strengthen support related to business closure."

However, it noted as a problem that 26% of self-employed individuals do not register their businesses, and unofficial self-employed workers, special employment types, and freelancers lack documentation to prove income, making it impossible to establish consistent standards related to employment insurance. It then argued that the employment support function of the National Employment Support System, which helps wage workers find reemployment, should be strengthened.

KDI said, "Beyond simple income support for livelihood maintenance, it should provide marketable vocational training and work experience opportunities, playing a role distinct from current business closure and re-startup support," and added, "The employment support services provided by the National Employment Support System should be enhanced."

Regarding unemployment assistance, it explained, "Expanding the unemployment assistance benefit period under the current circumstances is unlikely to significantly induce voluntary unemployment," adding, "The current six-month benefit period is relatively short internationally, and as technological changes accelerate, sufficient support periods necessary for acquiring new skills are required." It continued, "While the employment experience requirement should be maintained or strengthened, income and asset criteria need to be relaxed compared to now to reduce blind spots," and added, "Increasing benefit amounts should be approached cautiously as it is expected to rapidly increase the side effects of voluntary unemployment."