Unemployment Benefits Surpass 17 Trillion Won... Employment Insurance Fund Faces 600 Billion Won Deficit

Prolonged Slump in Manufacturing and Construction Drives Rise in Recipients
Experts Warn: "Current System Unsustainable... Structural Reform Needed"

As the economic downturn and stagnation in the job market have continued for an extended period, the total unemployment benefits paid out last year surpassed 17 trillion won for the first time in history. The Employment Insurance Fund recorded a deficit of nearly 600 billion won.

On June 14, Yonhap News reported, citing the Ministry of Employment and Labor’s "2025 Fiscal Year Employment Insurance Fund Settlement Report," that last year’s expenditure for employment insurance projects amounted to 20.9405 trillion won. This figure represents a 12.3% increase from the previous year. This marks the first time since 2021, when the COVID-19 pandemic had an especially severe impact, that employment insurance project expenditures have exceeded 20 trillion won.

The main reason for the increase in spending is unemployment benefits. Last year, unemployment benefit payments reached a record high of 17.4833 trillion won. This was driven by continued sluggish employment in the manufacturing and construction sectors, as well as an increase in the minimum wage, which raised the lower limit for unemployment benefit payments. In addition, expenditures for maternity protection benefits, such as parental leave pay, which are also paid from the unemployment benefit account, increased significantly, further burdening the fund's finances.

The core problem is the imbalance between expenditures and income. Last year, the Employment Insurance Fund’s revenue amounted to just 20.3485 trillion won, resulting in an overall deficit of 592 billion won for the fund. This indicates that it has become difficult to cover the rapidly increasing expenditures with only premium income and fund management returns.

Moreover, the financial condition of the unemployment benefit account is essentially being maintained through borrowings. While the nominal reserve on the books stands at 1.7 trillion won, after excluding funds borrowed from the Public Capital Management Fund, the actual reserve is approximately 6 trillion won in deficit.

The Employment Insurance Act stipulates that a reserve equivalent to 1.5 to 2 times the annual expenditure must be secured to prepare for large-scale unemployment situations. However, last year, the reserve ratio for the unemployment benefit account was only 0.1 times, falling far short of the recommended standard.

Experts believe that the current financial structure is unsustainable. If the economic downturn continues and policies to expand the employment safety net are further pursued, unemployment benefit expenditures are likely to keep increasing. Accordingly, there are calls for structural discussions to secure the sustainability of the Employment Insurance Fund, such as adjusting premium rates, reforming the benefit system, and strengthening benefit management.

This content was produced with the assistance of AI translation services.