The Korean government is lowering the threshold for designating employment crisis zones and special employment support industries to preemptively respond to a jobs crisis. The labor market is facing heightened concerns as the prolonged downturn in manufacturing and construction is compounded by the variable of the U.S.-Iran war.
The Ministry of Employment and Labor said Friday that it will shorten the calculation period for the quantitative requirements, one of the designation criteria for employment crisis zones and special employment support industries, from the preceding 12 months to the preceding 6 months. The eased standard applies to all four quantitative requirements, including the rate of change in employment insurance subscribers and the growth rate of unemployment benefit applicants.
The ministry also decided to include day laborers in the count of unemployment benefit applicants, a key indicator for assessing employment conditions. Examining the situation of day laborers, who face greater job insecurity than regular workers, allows for a more sensitive reading of worsening employment conditions.
Employment crisis zones and special employment support industries are systems through which the government supports regions and sectors facing rapidly deteriorating employment conditions. The two systems expand employment retention subsidies and ease unemployment benefit requirements for targeted sectors and regions. Benefits also include support for vocational training and reductions in social insurance premium payments.
During the COVID-19 pandemic, industries such as shipbuilding, travel and tourist accommodation received government support through the two systems. Cities including Gunsan, Geoje and Tongyeong were also added to the support list due to deteriorating industry conditions. Currently, no areas are designated under either system. This is because the Ministry of Employment and Labor introduced preemptive response zones for employment crises last year, placing seven areas where signs of employment deterioration were detected into a protection framework in advance.
The labor market has recently frozen due to the fallout from the U.S.-Iran war. Employment insurance subscribers in March increased in the high 200,000 range for the third consecutive month. However, manufacturing, which supports the industrial base, has seen subscribers decline for 10 consecutive months, while construction has posted drops for 32 consecutive months. Because employment is a lagging indicator of the economy, the labor market could deteriorate further in the second half of this year.
"We decided to improve the system after reflecting feedback from the field that the requirements of the two systems were too strict," a ministry official said. "We will continue to supplement the two systems so that we can preemptively respond to employment crises."
