Cabinet Approves Amendments to Employment Insurance Act
Coverage Criteria Shift from Prescribed Working Hours to Actual Wages
The government will utilize real-time income data in employment insurance to eliminate blind spots. The criteria for employment insurance coverage and collection will be changed to an actual wage basis, and the standard for job-seeking benefits (unemployment benefits) will also shift to actual wages. By doing so, the government aims to identify previously omitted subscribers and expand the employment safety net.
On the 25th, the government held a Cabinet meeting at the Government Complex Seoul and reviewed and approved partial amendments to the "Employment Insurance Act" and the "Act on the Collection of Employment and Industrial Accident Insurance Premiums," both under the jurisdiction of the Ministry of Employment and Labor. These amendments, which were pre-announced by the Ministry of Employment and Labor in July, are intended to address blind spots in employment insurance coverage.
With this amendment, the criteria for employment insurance coverage will change from prescribed working hours (15 hours per week) to actual wages (earned income under the Income Tax Act minus non-taxable income). It is difficult to accurately verify prescribed working hours even through on-site inspections, making it challenging to identify workers missing from employment insurance enrollment. Once the criteria shift to actual wages, the government will be able to cross-reference income data reported to the National Tax Service and identify and enroll missing workers every month.
Additionally, even if a worker's income from each individual job does not meet the coverage threshold, if their combined income exceeds the standard, they will be able to enroll in employment insurance upon request. The Ministry of Employment and Labor explained that this will allow for the protection of low-income workers engaged in multiple jobs.
The collection standard will also change from average monthly wage to actual wage. The requirement for employers to report the total annual wage of each employee to the Korea Workers' Compensation and Welfare Service by March 15 each year, separately from national tax reporting, will be abolished. Instead, insurance premiums will be assessed based on income information that employers have already reported to the National Tax Service. This aims to reduce the burden on employers of double-reporting the same employee income and to improve the accuracy of insurance administration.
The standard for calculating job-seeking benefits will be changed from wages to actual wages. Specifically, the basis will shift from the average wage over the three months prior to separation to the actual wage over the year preceding separation. The Ministry of Employment and Labor explained that by aligning the calculation standards for job-seeking benefits and insurance premiums, job-seeking benefits will better correspond to the cost burden. This is also expected to prevent job-seeking benefit amounts from being affected by temporary income fluctuations, thereby contributing to income stability and encouraging job-seeking activities for workers who lose their jobs.
Minister of Employment and Labor Kim Younghoon stated, "This amendment is the result of labor, management, experts, and the government collectively considering and reaching a consensus on the future direction of the employment safety net in response to changes in the labor market." He added, "As employment insurance marks its 30th anniversary this year, we expect this will lay the foundation for it to evolve into a more universal employment safety net."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
