From January to August this year, 46,909 cases of fake job-seeking to receive unemployment benefits by submitting false documents or conducting job-seeking activities just as formality were detected. Last year, the number of such cases identified was 69 in the first half and 1,295 in the second half. As the government strengthened requirements for the eligibility of unemployment benefits and procedures to verify job-seeking activities, which had been eased since July last year due to COVID-19, the number of detected cases surged. There must be a lot more hidden cases of wrongfully receiving unemployment allowances in reality as the number of identified cases is so high.
According to the data submitted by the Ministry of Employment and Labor to the National Assembly, there are various expedients to receive unemployment benefits. The most common ones are applying for companies whose recruiting season is over or that don’t have plans for recruiting or passing the written review phase but not attending interviews. There were also cases where the fraudulent job seekers applied for jobs they were not eligible for – such as applying for the nurse’s aide position without a necessary qualification – and forging an HR person’s signature on an interview confirmation letter. Small- and medium-sized enterprises and small business owners are also being affected by an increasing number of fake applicants as they work for the minimum period to receive unemployment allowances and ask for dismissal.
The reason why there are so many people who are focused on receiving unemployment benefits, rather than getting a job, is the ironic structure where they get paid more when not working. The minimum amount for unemployment benefits is 80 percent of the minimum wage, or 1.85 million won, which means there isn’t much difference in how much a person paid the minimum wage received after four major insurance premiums and taxes. Last year, twenty-eight percent of unemployment benefit recipients received more than their previous salaries after taxes while employed. The length required to pay employment insurance premiums to be eligible for unemployment benefits is also shorter at six months, compared to 12 months in Japan or Germany. These are the reasons why there is an increasing number of repeated unemployment benefit recipients while the reemployment rates of unemployment benefit recipients are getting lower.
The employment insurance fund, which finances unemployment benefits, ran out of its over 10 trillion won reserve, and its deficit recorded 3.9 trillion won, excluding 10.3 trillion won borrowed from other funds. The employment insurance premium rate was also raised, leading to the additional premiums burdened by employees and employers of five trillion won. The problems with unemployment benefits, which waste the taxpayers’ precious money and are demoralizing to those who dutifully pay employment insurance premiums, should be addressed. Fraudulent cases should be identified, requirements for eligibility should be strengthened, and the minimum amount should be lowered in order to achieve its purpose of encouraging reemployment.