Payday deductions, utility bills to be suspended

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Payday deductions, utility bills to be suspended

To help people get through the coronavirus crisis, utility payments and payroll deductions for things like health insurance will be temporarily suspended.

“We are not only trying to help individuals but also companies keep jobs by reducing costs,” President Moon Jae-in said on Tuesday while chairing his second economic emergency council.

The timing was not announced, but probably next month, companies will not have to deduct employee contributions to what are known in Korea as the four social insurances: the national pension fund, health insurance, employment insurance and work-related injury insurance.

Since companies match employee contributions, they will also benefit.

Moon said the government was supporting businesses to ultimately protect jobs.

“Recently companies’ requests [to the government] for job security aid have increased exponentially,” Moon said.

Home utility payments including electricity bills will also be suspended, but it wasn’t clear for how many months.

Moon asked the council to swiftly come up with measures that would have a concrete impact on people’s lives.

“The biggest victims of Covid-19 are the people,” Moon said. “I hope we swiftly and clearly show the government’s determination to protect the public’s lives.”

The second economic emergency council meeting primarily focused on supporting business including big companies, at a time of unprecedented turmoil. Trading on the stock market has been halted six times in March because of sharp increases or drops.

The first economic emergency council meeting held March 19 focused on helping small businesses such as restaurateurs and announced 50 trillion won ($40.2 billion) in financial aid and other support.

At Tuesday’s meeting, the council announced support of 100 trillion won to prevent companies from going bankrupt and stabilize the volatile financial markets.

The government said the focus of the latest aid is crisis containment.

“We have decided to inject emergency funding for corporate relief worth 100 trillion won, a significant expansion from the emergency financial action of 50 trillion won made in our first economic emergency council,” Moon said.

“We have expanded [support] from small business owners and small- and medium-sized enterprises [SMEs] to [larger] companies in major industries.”

He said “pre-emptive” action was aimed at protecting jobs by saving companies.

According to the government, 58.3 trillion won will be used to support businesses including loans and loan guarantees from state-owned financial institutions.

This includes a 29.1 trillion won emergency management fund for SMEs including 21.2 trillion won in fresh loans from state-owned financial institutions including the Korea Development Bank and 7.9 trillion won in loan guarantees.

“If needed we will include conglomerates to prevent companies from going bankrupt due to capital shortage,” Moon said.

The remaining 41.8 trillion won will be used to stabilize markets.

The government has created a 10.7 trillion won equity market stabilization fund, which is funded by 18 financial companies.

The stabilization fund was first adopted during the global financial crisis in 2008. It also created a 10 trillion won bond market stabilization fund.

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