Government Moves to Reform Unemployment Benefits After Controversy Over 'Higher Pay Than Minimum Wage'

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

This move comes in response to criticism that unemployment benefits discourage people from seeking employment, as there have been cases where the benefits received were higher than the actual income of those working for minimum wage.

It is reported that the government is strongly considering a plan to lower the monthly unemployment benefit amount while extending the total duration of the benefit period.

Under the current system, a worker who works five days a week receives wages for six days in total, which includes pay for the five working days plus a weekly holiday allowance.

In contrast, unemployment benefit recipients are currently structured to receive 80 percent of the minimum wage for seven days a week.

Furthermore, since unemployment benefits are exempt from taxes and social insurance premiums, this creates a situation where the take-home amount for benefit recipients exceeds that of minimum wage workers.

To address this, the government plans to exclude unpaid holidays when calculating the number of days for which unemployment benefits are paid, thereby reducing the monthly benefit amount.

The plan is to change the structure of the minimum unemployment benefit threshold to be based on six days per 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 benefits for only 26 days.

This year, the minimum monthly unemployment benefit is 1,981,440 won based on a 30-day period. If the system is changed, the monthly benefit amount 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, through a task force on employment insurance system improvement that involves both labor and management representatives.

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

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.