Protect the vulnerableThe economic impact of the Covid-19 outbreak is rapidly expanding to the employment front. According to the Ministry of Employment and Labor, the number of applicants for unemployment benefits increased by more than 30 percent so far this month compared to the same period last year. The number of companies that applied for government subsidies to maintain their employees also has increased by a large amount. The pandemic will have a strong impact on our struggling economy in the long term.
Those most vulnerable to the shocks from the outbreak are in the lower income brackets, including contract workers and daily laborers across the country. Employees of small businesses that employ fewer than five are included.
Despite the urgent need to help these workers survive, our social safety networks have large holes. Compared to full-time workers at large companies, they are in a bind. For instance, employees at small firms with fewer than five workers are not eligible for 70 percent of their normal paychecks as workers at larger companies get “subsistence allowances,” and daily laborers barely qualify for unemployment benefits due to regulations.
The self-employed and mom-and-pop stores are also at the cliff’s edge. The Moon Jae-in administration promised them delayed interest payments on their loans for six months, yet that may not be enough. Despite the government’s pledge to create a 100 trillion won ($81.4 billion) emergency fund to help struggling employers stay afloat, the money won’t necessarily be used efficiently. Despite all the buzz about the central government’s offer of basic incomes in a time of trouble, local governments are doling out cash on their own due to a critical lack of specific guidelines.
The government must immediately fix the welfare system to address the gaping holes in our social safety nets, including overly rigorous requirements for unemployment benefits for the underprivileged. To prepare for a drastic surge in jobless claims, the government must have enough money to spend. It also must increase the budget to help small businesses maintain their employees to more than 500 billion won, as it promised earlier.
An economic panic deals a critical blow to the vulnerable class. Once their livelihoods collapse, they cannot stand on their own feet. The government must ensure they can withstand this peril. At the same time, it must reinforce its incentives for companies to keep their workers. Next week, the government plans to announce steps to help the underprivileged overcome the crisis. We hope they are successful.