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Fund to help workers faces complaints from own underpaid workers

Jan 21,2019
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To mitigate adverse effects of the 29-percent increase in the minimum wage over a two-year period, the government introduced a job stability fund to support small businesses in their hiring of workers. The fund’s budget for 2018 stood at 2.97 trillion won ($2.65 billion), while 2.82 trillion won was appropriated for this year.

The fund, which is supported by the taxpayers, partially covers wages for businesses with fewer than 30 employees. Last year, companies could apply to receive 130,000 won a month for each employee earning less than 1.9 million won a month.

Despite the well-meaning intentions of the program, the fund hasn’t generated as much interest as hoped. The implementation rate, or usage rate, for last year’s fund stood at just less than 60 percent in November. It did jump to 84.5 percent by the end of December, but that was only after the government made a concerted push to get more people to sign up to improve the program’s image.

The JoongAng Ilbo interviewed 10 of the 703 evaluators working for the job stability fund. The Korea Workers’ Compensation & Welfare Service (Comwel) oversees the fund, which was launched last year by the Ministry of Employment and Labor.

The employees, who are under one-year contracts, voiced frustration that their responsibilities were identical to those of salespeople, despite originally being hired to evaluate applicants. The workers said they have to reach out to as many companies as possible to convince them to receive the handouts.

An evaluator recalled an ordinary day at the office:

“Sir, I called because you haven’t yet applied for the job stability fund,” he said on the phone.

The cold call is met with a rejection for the 80th time that day. “No thanks, I’m busy,” was the response.

Similar concerns were expressed by others, who shared their experiences in a group chat online.

Some of the messages read, “Can we use taxpayer’s money like this?” to “If they’re going to do it like this, why don’t they just make the companies stand in a line outside Comwel.”

Other messages included: “Why did they decide on such a high budget and cause this sort of mess?”

The employees who spoke out said that they wanted others to know how the fund, established with well-meaning objectives, was not serving its intended purpose.



A push to spend the fund

On Jan. 14, the Ministry of Labor and Employment reported that a total of 2.51 trillion won of support funds was disbursed to 2.64 million workers at 650,000 small businesses last year. The average support per worker was 950,000 won.

While the ministry claimed that the fund was able to lighten the wage burden and allow workers to keep their jobs, the 10 interviewed evaluators said that the ministry pressured them to raise the fund’s implementation rate.

As of September last year, the implementation rate stood at just 44.5 percent and was still under 60 percent in November. But in just a month, that rate rose almost 25 percentage points to nearly 85 percent. In December alone, 769.9 billion won was disbursed.

“Work was conducted in a way to just hand out support funds in order to raise the implementation rate at the last minute,” said one evaluator.

The evaluators said that funds were given to businesses that did not even apply if they met the qualifications. Businesses that refused payment were told to decline in writing.

The Labor Ministry eased regulations throughout the year to allow more companies to apply.

While the fund originally targeted businesses with fewer than 30 employees, the rules were adjusted so that businesses with more than 30 employees could apply and be provided with support for up to 29 of those workers. Businesses with fewer than 300 employees were also allowed to apply if they had workers over the age of 60. The regulation requiring businesses to maintain employment for more than a month was repeatedly broken.

Breaking rules was rampant at one branch of Comwel. Evaluators would simply fill out application forms for the businesses and just get the businesses to sign.

“I want to request an audit and stage a one-man protest,” said one evaluator.

At the end of November, Comwel branches were ordered to give extra support to companies that did not apply for the fund.

According to internal documents from Comwel dated the end of November, the Labor Ministry ordered support payments to workers who had not yet applied. The businesses were first paid and notified about the payment through mail.

Considering that the final payment day to companies was on Dec. 26 and the rate stood at nearly 70 percent on Dec. 11, 438.8 billion won was handed out from Dec. 12 to Dec. 26.

“Extra support for workers who did not apply played a big role,” explained a Comwel official who requested anonymity. “We had a goal of handing out around 230 billion won in support to businesses that didn’t apply during this period.”



Disorder after mismanagement

With numerous changes to rules and regulations, problems arose at the fund.

“As the fund’s operation regulations were changed in order to increase the number of applicants, there was a lot of confusion in the field,” explained one evaluator. “The problem wasn’t payments given to companies abusing the system. It was rather mistaken or repeated payments due to measures taken to increase the take-up rate.”

There were instances in which a worker left the company, but support funds were still disbursed as the company did not inform the administrators. Other problems included instances where support funds were paid more than once due to electronic errors or simple mistakes.

In another case, the funding was given to family businesses. The stability fund, which was created not only to ease the labor-cost burden but also to encourage small businesses to increase hiring, is not supposed to make payments to family companies.

The owner of that business reportedly asked why the government was giving him this money when the person working for him is a family member.

“Stability fund money is handed out retroactively until the month the business applies, so the support fund increases toward the end of the year,” explained Sa Seok-jung, the head of the job stability support bureau at Comwel. “I think the active administrative process to help as many small businesses caused a misunderstanding.”



Unstable minimum wage jobs for the minimum wage cause

Evaluators at Comwel are frustrated by what went on at the organization. Last year, around 300 of the 703 evaluators working for the fund left the job. One of the reasons for the high turnover may be the salary. The evaluators are only paid 1.78 million won per month.

The evaluators complained that they were tormented and frustrated as they were constantly under pressure to meet quotas. This required making as many as 100 phone calls a day to small businesses and visiting them at random to receive applications.

“It was difficult to get five applications a day,” one evaluator noted.

The situation was seen by some as extreme. One evaluator submitted a petition to the National Human Rights Commission of Korea, the official state institution charged with protecting human rights.

The evaluator wrote in the petition: “Pressure to meet quotas naturally fell on the evaluators at the bottom of the organization.”

“[I] was forced to work overtime and on holidays,” the evaluator added.

Some officials at Comwel hinted at possibility of transitioning the evaluators to regular employment.

“There were a lot of evaluators who were preparing for a job at a public institution, and the possibility of a transition was a big motivator for them,” said one evaluator.

This promise was not realistic. According to a report submitted by Comwel to the National Assembly last August, the evaluators are not considered for transition to regular employment.

“In order to avoid unneeded misunderstanding, we clearly notified each branch to not mention regular employee transitions since we employed the evaluators,” explained Kim Kwang-soo, a job stability planning official at Comwel.

Severance pay became an issue for the evaluators as their contract period was one day short of the minimum needed to be qualified for such payments. Comwel decided on Jan. 14, after the evaluators had already left their jobs, to pay severance.

Comwel did not extend the contract for the evaluators last year and opted to newly hire 703 evaluators early this year. In order for last year’s evaluators to continue working, they have to go through the employment process again.

The organization explained that the hiring process was due to the fact that the fund itself is a temporary program.

Evaluators this year were also hired under a contract that also doesn’t last a full year, opening up the possibility that the organization may again face controversy surrounding severance pay. Those who are rehired this year will fall short of the minimum needed to be considered regular employees. They will be employed 16 days less than the required two years.


BY KIM TAE-YUN, CHOI HYUN-JU AND MOON HYUNG-KYUNG [chae.yunhwan@joongang.co.kr]