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[Opinion] Unemployment Fraud

Posted February. 20, 2006 03:01,   


A few hours before the British Broadcasting Corporation (BBC) aired the first segment of a six-part series on unemployment fraud on January 16, Britain’s labor minister hurriedly announced a plan to reform unemployment benefits.

The BBC program showed footage of a man receiving unemployment benefits for allegedly not being able to “lift a frying pan” easily lifting wood from his woodpile at home.

One study found that the ratio of people whose fragile health conditions truly prevent them from working out of those who are collecting disability unemployment is only 20 percent. If one million healthy unemployed people get jobs, it would save Britain seven billion pounds in taxes annually, according to the British Ministry of Labor.

In France, some point out that unemployment benefits discourage job-seeking efforts. An unemployed mother of two children is eligible for 950 euros in unemployment benefits a month, but, if she gets a job, she is likely to receive 900 euros a month, France’s minimum wage. Excluding transportation costs, her financial status will be worse than when she was out of work.

This and other reasons may lie behind the increase in the number of French unemployment benefit claimants, which jumped to 1.2 million last year from 370,000 in 1989. A French economist lamented France’s current labor conditions, saying, “Unemployment benefits, which should play a temporary safety net role, foster poverty by becoming a permanent device.” This is why Germany has reduced the period one can benefit from unemployment.

The number of fake unemployment cases is increasing in Korea every year as well. The number of dishonest unemployed people soared by 41.3 percent last year, and the money these people have collected grew from about 1.4 billion won in 2001 to about 3.8 billion won last year. It was also revealed that 83.6 percent of them didn’t report their employment status even after getting jobs.

Although the moral hazard of this phenomenon is serious, the government’s weak support for employment is another problem. The Ministry of Labor has belatedly arranged a countermeasure plan, saying, “So far, there have not been enough consultation and training programs for unemployment recipients who need them.”

No one will oppose a plan to strengthen social safety net mechanisms, like unemployment benefits. But it is unfair if the taxes paid by hardworking members of the public fund unemployment fraud. It is even more unjust if the government raises taxes after the unemployment rate increases because of inefficient government policies. A policy to create more jobs should come before a plan to increase the number of public servants, and would help solve the nation’s polarization issues.

Kim Sun-deok, Editorial Writer, yuri@donga.com