Unemployment checks jump 56.6% in July

Economy

Published: 10 Aug. 2020, 20:03 Updated: 10 Aug. 2020, 20:16

Unemployment checks jump 56.6% in July

Job seekers enter a Korea Employment Information Service center in Jung District, central Seoul, for information about unemployment benefits on July 15. [NEWS1]

Unemployment benefits paid out by the government hit an all-time high in July, reaching nearly 1.2 trillion won ($1.01 billion).

According to the Ministry of Employment and Labor on Monday, Koreans collected about 1.19 trillion won in unemployment benefits in July, 429.6 billion won more than the same month last year — a 56.6 percent increase.

Unemployment benefit payments have been breaking records every month since February, when the coronavirus crisis hit Korea.

Employment insurance payments exceeded 1 trillion won in May for the first time in history.

“The government’s budget for unemployment benefits this year is about 12.9 trillion won,” a spokesperson for the Ministry of Employment and Labor said. “A total of 6.72 million won had been disbursed until recently and it will not likely exceed the budget by the end of the year.”

A total of 3.51 million people in the manufacturing industry applied for unemployment benefits last month, a 1.8 percent decrease from a year earlier's 3.45 million. That was the largest on-year decrease since 1998, after the peak of the Asian Financial Crisis. Unemployment benefit applications from the manufacturing industry have been decreasing for 11 consecutive months since last September.

The report noted that unemployment benefits applications filed by people in their 20s and 30s also saw a sharp decline in July. The number of unemployment benefits applicants who are under 29 was about 2.4 million, a 2.9 percent decline from the same month a year earlier. During the same month, the number of unemployment benefits applicants in their 30s decreased by 1.6 percent to reach 3.3 million.

Meanwhile, the total number of unemployment benefit applicants who are aged 60 or older reached 1.76 million, a 10.7 percent rise compared to the same month a year before.

According to Lee Young-jin, head of the future employment analysis division at the ministry, applications by people aged 60 or older to join the employment insurance system are increasing because of government policies expanding job opportunities for them.

Conversely, applications by younger people are actually falling.

For worst-affected industries including manufacturing, the government is considering extending the application period for the employment maintenance subsidy from 60 days to 180 days.

“We are planning to open an employment policy commission on Aug. 20 and discuss an extension of the period of the employment maintenance subsidy for worst-affected industries such as tourism and travel,” Lee Jae-gap, minister of employment and labor, said during a task force meeting on employment and labor stabilization held on Monday.

Critics say the government must come up with some measures that can create quality jobs in the long run. They say the Moon Jae-in administration's push to create digital-focused jobs — in line with its Digital New Deal initiative — is only a stopgap since the policy will likely generate temporary positions with low-productivity.

“I can’t really feel any efforts from the government to expand job creation,” Kim Dong-won, a former economics professor at Korea University said. “The government must come up with some measures [to stabilize employment] such as providing tax relief to companies that are trying hard to hire more employees amid Covid-19.”

BY KIM DO-NYUN, CHEA SARAH [chea.sarah@joongang.co.kr]