Firms fail to pay into unemployment insurance

Workers left out in cold, while companies go unpunished

Kim Han-ho, 52, was hospitalized for 45 days because of an industrial accident at a construction site. But when Kim went to collect unemployment insurance, he was told he was not eligible - his employers had three times failed to pay into the government unemployment program, thus canceling his subscription.

Under the Employment Insurance Law, introduced in 1995, an employee and an employer jointly pay into the unemployment benefits system, regulated by the government. If an employee who has worked for more than six months loses his or her job, the government will pay unemployment benefits for up to one year. For a temporary worker who works more than four hours a day, an employee is required to report to the government by the 15th day of the month after the worker is hired.

Kim was subcontracted to work for Daewoo Prugio apartments from January 7 to 31, Lotte Mart from February 2 to 9, Ilshin ENG apartments from February 11 to March 4, the state postal office from March 5 to 21, and Daewoo Prugio apartments again from May 22 to June 16. It was on June 16 that he was injured.

However, Kim’s unemployment insurance payments were missed during the time he worked for the subcontractors handling Lotte Mart and Ilshin ENG apartments, and the subcontractor for Daewoo Prugio apartments failed to make payments during his second stint with them, from May 22 to June 16.

The poor management of Kim’s unemployment insurance payments came as a shock to him. "I definitely believed I was subscribing to the unemployment insurance," Kim said.

As in Kim’s case, temporary workers at construction companies have been plagued by poor management by their subcontractors, but local labor offices have failed to appropriately cope with the matter, citing a workforce shortage in handling claims. In the first eight months of this year, the labor office in Ulsan cited only two employers who had violated the employment insurance law. The four subcontractors who had failed to pay into Kim’s insurance program were not uncovered by the office’s investigation.

Kim Cheong-sil, an official at the Ulsan labor office, said, "It’s nearly impossible to find employers not subscribing to unemployment insurance for their workers without people reporting it, as only six officials handle 300,000 to 400,000 cases a year."

Another problem is the lenient punishment meted out to employers. Those who fail to subscribe to unemployment insurance on their workers’ behalf face maximum fines of only 3 million won (US$3,000).

One construction company official, who manages hundreds of temporary workers, said, "I never pay a fine, even though some of my workers frequently are not subscribed to unemployment insurance."