Jobless benefits for all

Build consensus on expanding social safety net

Top government officials are floating the idea of extending employment insurance coverage to all workers in a bid to strengthen the social safety net. The extension appears necessary as a growing number of workers are losing their jobs amid the coronavirus pandemic. Yet it is unclear if the liberal Moon Jae-in administration can put the idea into action as it faces some hurdles.

The issue has come to the fore since Kang Gi-jung, senior presidential secretary for political affairs, stressed the need for the expansion of unemployment insurance in a seminar Friday. He said extending the nation's unemployment insurance to all people ― like the national health insurance ― could be one of the post-pandemic challenges South Korea faces.

After more than three months under the duress of the COVID-19 pandemic, Korea is witnessing the vulnerability of its workers, particularly temporary, self-employed, freelance and gig economy workers. Statistics showed that day laborers and temporary workers decreased by 593,000 in March from a year ago. This is a dire figure slightly worse than the decrease of 592,000 workers in September 1998 during the Asian financial crisis.

Strengthening the social safety net is crucial in protecting workers in the face of mass layoffs. Therefore our society needs to discuss how to protect the jobless. This discussion should include measures to extend unemployment benefits to the most vulnerable workers who cannot subscribe to the insurance. It is also necessary for the government to ease the insurance premium burden on those workers.

When we look at the figures, it's a pressing issue. Of the 27.79 million economically active people in the nation, only 13.78 million subscribe to unemployment insurance. That leaves some 14 million without unemployment benefits when they lose their jobs. Temporary, self-employed and gig workers usually comprise this group.

But unemployment insurance, unlike relief funds, require subscribers to pay premiums: half of them equally by employers and employees. But the problem is the self-employed, freelancers and platform workers will have to bear the entire insurance fee themselves or rely on government assistance. For this reason, less than1 percent of the self-employed currently subscribe to unemployment insurance, although they were allowed to do so in 2012.

Also worrisome is that the expansion of benefits could put a heavier financial burden on unemployment insurance which suffered a deficit worth 2.2 trillion won ($1.7 billion) last year. The provision of the benefits hit a record high of 8.1 trillion in 2019.

The Moon administration and the ruling Democratic Party of Korea said expanding the coverage of unemployment insurance is a medium- and long-term goal. Critics are against the expansion, arguing that it is a populist proposal favoring labor over the business sector. Thus, policymakers should first build a social consensus before making a decision on this important but contentious issue.