Subsidies for young interns reexamined

In its efforts to boost youth employment, the government has been spending most of its money on giving subsidies to companies that hire young interns. But it is considering paying more interns directly after a report suggested this leads to more long-term employment.

According to the Ministry of Strategy and Finance on Sunday, related government agencies are planning to announce revised measures to boost employment of women and young people next month.

The government’s budget for the intern subsidies is 21.78 billion won ($17,513) for the year.

Currently, about 81 percent or 17.58 billion won has been allocated to companies with more than five employees who have plans to hire interns. This comes in the form of a monthly subsidy of 500,000 won to 600,000 for every young intern hired for three months.

If those interns are hired as full-time workers and stay on for more than a year, the companies can receive up to 3.9 million won.

The remaining 19 percent of the budget is allocated for the interns themselves, who can receive up to 3 million won if they remain employed for more than a year. Few people have applied so far because the subsidies have not been widely publicized.

“Consideration of the issue was ordered by the president at the National Economic Advisory Council’s meeting on Feb. 24,” said a director general at the Finance Ministry. “Although we are reviewing the plan, nothing has been confirmed at the moment.”

The president ordered the reconsideration based on a report questioning the efficacy of the subsidies, released last year by the National Assembly Budget Office.

It turned out that companies are not using the subsidies to raise the salaries of interns as hoped, but have been instead using them to cut their overall labor costs.

Further, interns who received the subsidies directly were more likely to still be employed after their first year.

The report showed that 100 million won in subsidies given directly to interns led to 59.9 people holding full-time positions a year later. The same amount in company subsidies led to just 13.9 people keeping their job.

“It seems like that the indirect subsidy has had less of an impact on young people, rendering them less able to feel the effects of the government’s efforts,” the official said.

BY SONG SU-HYUN [song.suhyun@joongang.co.kr]