Unemployment benefits hit record 1 trillion won in May

People lined up for the filing of unemployment insurance claims at a job center in Seoul on May 13. [YONHAP]

Employment insurance payouts hit an all-time high in May as the cost of coronavirus joblessness hit hard.

The situation is expected to turn soon, and the numbers are already starting to indicate that unemployment may be coming down. Government policies are seen kicking in this month that will help get people back to work.

According to the Ministry of Employment and Labor on Monday, last month a total of 1.02 trillion won ($848 million) of employment insurance payments were made. That’s 257.5 billion won more, or a 34 percent increase, compared to the same month last year.

It was the first time that the employment insurance payments exceeded 1 trillion won in a single month. The employment insurance handouts have been breaking records for four months running.

In the first five months of the year, 4.4 trillion won of employment insurance payments were made. At the current rate, the government full-year estimate of 9.5 trillion won could be broken.

Last year, employment insurance payments exceeded 8 trillion won for the first time ever.

The government said it estimates the impact of the coronavirus pandemic should start to lessen in June, with government policies supporting employment. The number of people who have newly applied for unemployment benefits have eased for the second consecutive month after hitting a peak in March.

In May, the number of people who applied for the employment insurance was 111,000. Although this is 27,000 more than the same month a year earlier, it is 18,000 less than in April.

A total of 22,000 people in manufacturing applied for benefits, 14,000 in wholesale and retail and 13,000 in construction.

One government policy seen as effective is subsidizing of wages of employees on leave to prevent them from being laid off.

According to Statistics Korea, in March the number of people on temporary leave was 1.26 million more than a year earlier, while in April that figure was up 1.13 million.

“The employment subsidy has the effect of limiting the increase of the number of people applying for unemployment benefits,” said Kwon Ki-seop, head of the employment policy office at the ministry.

There is growing concern that while companies are not firing employees they are also not hiring actively, especially younger workers.

Last month, 155,000 people were newly added as subscribers to the employment insurance program compared to the same month a year earlier. This number can be seen as a proxy for the number of people added to the ranks of the employed. Among the new subscribers, those aged 29 or younger were 63,000 fewer on year, while those in their 30s were 62,000 fewer.

The government last week announced details of the various programs to create 550,000 jobs under the Korean New Deal banner. They are centered on digitization of national projects and partially funded by the supplementary budget.

It remains a matter of debate whether these projects will contribute to long-term sustainability of quality jobs.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]