―DPM says social safety net vital amid widening income disparity―
By Lee Kyung-min
The government is required to play a more significant role to prevent the COVID-19 pandemic from widening the growing income disparity, Deputy Prime Minister and Finance Minister Hong Nam-ki said Wednesday.
Post-pandemic crisis management should prioritize strengthening the social safety net, thereby protecting the most vulnerable in society. Otherwise, the "corona divide" will end up undermining the sense of unity, a key to maintaining sustainable, long-term growth, according to the top policymaker.
"Korea needs to make revisions to the state-run unemployment insurance system to help vulnerable people maintain a living despite suddenly losing their job. The measure is necessary to limit widening social inequality exacerbated by the virus," Hong said in a speech at the Korea Times Forum held in The Plaza Seoul hotel, Thursday. Second Vice Minister of Economy and Finance An Il-whan read the speech on Hong's behalf.
The Korean economy has been experiencing an unprecedented shock illustrated by the rapid deterioration of consumption, a nosedive in demand for tourism and a sharp drop in exports, all brought on by lockdowns and social distancing. This has led to corporate liquidity shocks and massive job losses, putting a strain on people's lives, the policy maker concluded.
"Korea lost 476,000 jobs in April from a year earlier, suffered mostly by low-income, temporary workers, all the more reason to make revisions to the unemployment system," he said.
The remark was in reference to Statistics Korea data that showed the country reported the biggest year-on-year loss of jobs in April, the highest since 658,000 in February 1999 when the country was reeling from the fallout of the Asian financial crisis.
Unlike salaried workers for whom subscription to the state-run unemployment insurance is mandatory, low earners including temporary and irregular workers not subscribed to the plan are left out of the unemployment benefits.
Also on the rise in his view is structural reform, defined by an increase in demand for more specific, need-based job training programs to manage the low-end workforce whose manual work will no longer be needed amid digitization.
"Smart technology-based automated manufacturing processes will leave a substantial number of people unemployed. The government should be prepared to have them not lose job opportunities altogether via continued, need-based training programs," he said.
The government plans to expand the scope and extent of the insurance coverage and subscription eligibility within 2020 to include those referred to as "special contract workers."
Some 770,000 such low earners include chauffeurs, insurance planners, marketing workers paid by the number of new loan takers they land, golf caddies, workers contracted with private education material publishers, delivery workers, messenger service workers and concrete mixer drivers.
