Government Moves to Reform Unemployment Benefits Amid Controversy Over Higher Payouts Than Minimum Wage

The government has begun reforming the unemployment benefits system to prevent a phenomenon where unemployment benefit payments exceed the actual take-home pay of minimum wage workers.

This move comes in response to criticisms that unemployment benefits discourage work, as there have been cases where the benefits received were higher than the net income of those earning the minimum wage.

It is reported that a plan to reduce the monthly unemployment benefit amount while extending the overall duration of benefits is being actively considered.

Under the current system, a worker employed five days a week receives wages equivalent to six days, including five days of work and a weekly holiday allowance.

In contrast, unemployment benefit recipients receive an amount equivalent to 80 percent of the minimum wage for seven days a week.

Furthermore, because unemployment benefits are exempt from taxes and social insurance premiums, a reversal occurs where recipients end up with a higher take-home amount than minimum wage workers.

To address this, the government plans to exclude unpaid holidays when calculating the number of days for unemployment benefit payments, effectively reducing the monthly payout.

The goal is to change the structure of the minimum unemployment benefit so that it is based on six days a week instead of seven.

Currently, if a person is unemployed for 30 days, they receive 30 days worth of benefits regardless of holidays. However, if four unpaid holidays are excluded, they would receive only 26 days worth of benefits in the future.

The minimum monthly unemployment benefit for 30 days is currently 1,981,440 won. If the system is changed, the monthly benefit would decrease by approximately 260,000 won.

It is reported that the government is considering extending the total payment period as a compensatory measure.

The Ministry of Employment and Labor plans to discuss the reform proposal, which includes these measures, within a task force for improving the employment insurance system that involves both labor and management representatives.

The government intends to finalize the reform plan within this year after gathering opinions from both sides.

Reported by Jung Da-eun | Video by Na Hong-hee | Graphics by Lee Jung-ju | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.