[EDITORIALS]An ill-managed safety net

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[EDITORIALS]An ill-managed safety net

The Board of Audit and Inspection has found that five funds controlled by the Labor Ministry were operated nonsensically. The funds were collected and administered without a plan, and the money was spent like water.
The fund for unemployment insurance has swollen to about 8.4 trillion won ($8.4 billion), four times annual expenditures. During the financial crisis of the late 1990s, when unemployment was at 6.3 percent, premiums jumped by 67 percent. But after the crisis, as unemployment fell to 3 percent, premiums remained unchanged, resulting in an annual surplus of 1 trillion won ―an unnecessary burden on the employers and workers who pay the premiums. What’s more, Korea Labor Welfare, which collects the premiums, and local labor offices, which manage the policyholders, did not share even basic data. Because of this, 2.4 million workers ―24 percent of those who applied for benefits ―did not receive them when needed.
Just as the money was collected with no rules, it was spent as bureaucrats pleased. The unemployment insurance fund paid 212.7 billion won to build Job World, a job training center for youth that should have been funded by the general account of the government budget. Of the projects supported by the funds, eight were stopped midway, and another eight had to change their plans.
The workers’ compensation fund was abused by malicious patients. In a great many cases, they stayed in hospitals longer than needed, getting examinations from a variety of departments, because there is no time limit for treatment. According to the audit board, 14,000 people, or 23.2 percent of patients injured at work, received treatment for more than two years, and more than 2,000 were under care for more than 10 years. All the while, they received 70 percent of their wages for doing no work.
If the funds are to be operated this way, what’s the use of a social safety net? Unemployment and workers’ compensation insurance, both quasi-taxes, are directly linked to corporate activity and people’s livelihoods. A more precise system is therefore necessary. Premium rates should be determined flexibly, according to the economic situation. The public servants that spent funds freely must answer for it. These funds, after all, were paid for by the sweat of the people.
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