Board of Audit and Inspection Releases Audit Report on Employment Insurance Fund Management
1.28 Million People Received More in Unemployment Benefits Than Their Salaries Over Seven Years
Board of Audit and Inspection: "Undermines Work Incentive
According to the audit report on "Status of Employment Insurance Fund Financial Management" released by the Board of Audit and Inspection on the 13th, a total of 1,277,000 people received more in unemployment benefits than their previous monthly salaries between 2016 and 2023. The total amount they received in excess of their previous salaries reached 1.285 trillion won.
The reason for this reversal is the calculation methods for minimum wage and unemployment benefits. The government pays unemployment benefits to employment insurance subscribers who lose their jobs for a minimum of 120 days and up to 270 days, with the benefit amount set at 60% of the average wage over the three months prior to unemployment. However, if this amount falls below the minimum wage, the lower limit is set at 80% of the minimum wage as a form of social security.
Last year, a worker who received the minimum wage and worked 40 hours a week for five days took home a net monthly pay of 1,843,880 won after taxes and various insurance deductions. During the same period, those receiving unemployment benefits while job hunting received 1,919,300 won per month. This means they received about 75,000 won more without working.
This occurs because minimum wage workers who work five days a week receive six days’ worth of pay, including one paid holiday, while unemployment benefits are calculated as 80% of the minimum wage for seven days. In addition, unemployment benefits are not subject to deductions for income tax or the four major insurances, so the net amount received is higher than that of minimum wage workers.
Furthermore, the number of repeat recipients of unemployment benefits is increasing. Among the 1,672,000 people who received unemployment benefits in 2023, 110,000 (6.6%) had received unemployment benefits three or more times in the past five years. The number itself has been rising every year, from around 80,000 in 2018.
The Board of Audit and Inspection investigated 975 people who had been employed as short-term contract workers at a commercial bank over the past five years and found that 87 of them repeated a pattern of working at the bank for six months, receiving unemployment benefits for four months, and having no income for two months.
The Board of Audit and Inspection pointed out, "The current structure of unemployment benefits reduces the motivation of workers to work and the willingness of the unemployed to seek jobs," and emphasized, "It is necessary to lower the minimum amount of unemployment benefits."
As of the end of last year, the unemployment benefit balance stood at only 3.5 trillion won. Excluding 7.7 trillion won in borrowings from the Public Capital Management Fund, the actual deficit is 4.2 trillion won. The Board of Audit and Inspection diagnosed, "Even including the borrowings, if an economic crisis were to occur suddenly, the fund could be completely depleted in eight months."
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