SEOUL, June 4 (Korea Bizwire) — South Korea’s state employment insurance scheme could run out of money this year if the novel coronavirus continues to hit the country’s job market until year-end, a report said Thursday.
The report from the National Assembly Budget Office estimated that the number of unemployment benefit recipients could reach 1.84 million should April’s employment situation last till the end of the year.
In that worst-case scenario, the country may need 3.5 trillion won (US$2.9 billion) to meet jobless claims, which could sharply worsen the employment insurance program’s funding conditions, it said.
The insurance plan had 3.5 trillion won in funds before the novel coronavirus outbreak in South Korea on Jan. 20.
Battered by the pandemic, South Korea lost about 467,000 jobs in April, marking the sharpest monthly decline in more than 21 years.
Payments of unemployment benefits thus jumped about 35 percent on-year to nearly 1 trillion won in April. Payments of unemployment allowances renewed record highs for three months running in April.
On Wednesday, the government proposed a third extra budget of 35.3 trillion won to cushion the economic blow from the coronavirus pandemic, which includes 3.4 trillion won to be used to fund the employment insurance.
South Korea introduced the employment insurance program in 1995 as the main employment safety net for regular workers in workplaces of certain sizes. Both employers and employees are obliged to pay monthly premiums.
All employers who hire at least one worker were required to enroll in the employment insurance starting in 1998.