For What Is Employment Insurance Used?

Business circles have begun to demand from the government an all-out revision of systems related to the administration of employment insurance.

Korea Employers Federation (KEF) pointed out in a newly prepared internal document that `it is problematic that the employers, who pay three times as much insurance premium as the employees do, are not allowed to engage in the government`s operations`.

Especially, business circles argue that the government and political circles are using the employment insurance fund as if it were their pocket money. The accumulated reserve fund employment insurance increased sharply from 335.1 billion as of the end of 1995 to 3,633 billion won as of the end of last year.

▽Problem==KEF indicated that it is problematic that despite the high insurance premium that firms should play, the reserved fund that has never been actually used is accumulating incessantly, that there is no inspection system on spending.

A good example is that from November female employees who take a maternity leave will be paid one-month salary (30 days) by the employment insurance. The business circles that had actually raised the fund were not able to participate in the process of determining as such. It is also their claim that it does not seem correct to grant the unemployment wage to those who have left their job temporarily and thus are not unemployed. The government forecasts that 200 billion won would be spent as a wage during a maternity leave.

KEF employment welfare team director Lee Ho-Sung said, ``It is not to deny the principle of protecting the maternity of a female employee but to demand that the government administrate the employment insurance according to the principle.``

In addition, the fund for stabilizing employment that is to be paid when a firm reduces the number of employees for its restructuring has not been used properly, so that the fund has been accumulating. Regarding this, the business circles point out, ``It can be translated as encouraging the business firms to postpone the reduction of employment, and thus is opposed to the purport of the firms` restructuring move.``

▽Business Circles` Alternative and the Government`s View==KEF requests that the insurance fund be administrated by a committee in which both business and labor circles participate. The committed is expected to the number of the unemployed appropriate to the economic situation and to determine rationally the size of the reserve fund for unemployment allowance. Germany and Austria are administrating a committee in which labor and management participate.

In particular, the business circles are worried that the financial aggravation and moral hazard would occur when daily employed construction workers could take out the employment insurance from 2003.

Ministry of Labor stated, ``We are considering to reduce the premium of insurance for stabilizing business operations whose reserved fund has been accumulating from the current 0.3 percent point to 0.2 percent point, thus by 0.1 percent.`` This can reduce the insurance premium paid by the firms by 150 billion won (as calculated on the basis of last year).

The employment insurance has been carried out since July, 1995. It was used as resource for stabilizing the society as it went through IMF. It has been conducting three operations, namely, unemployment allowance, stabilization of employment and development of human resources. Both the employers and employed pay 50 percent of unemployment insurance premium respectively, but only the employers for the premiums of the insurances for the stabilization of employment and for the development of human resources.

leej@donga.com