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

This move comes in response to ongoing criticism that unemployment benefits discourage work, as cases have emerged where benefits are higher than the actual income of those earning minimum wage.

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

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

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

Furthermore, because unemployment benefits are exempt from taxes and social insurance premiums, this creates an inversion where recipients take home more money 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 intention 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.

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

Instead, it is reported that the government is considering extending the total duration of benefit payments.

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 aims 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