In the Youth Job Recovery Plan released on the 27th, the government said it would give up to 4.8 million won in employment incentives over two years to young people who get jobs at mid-sized and small corporations in the Seoul metropolitan area. Until now, incentives were available only if they found jobs at mid-sized and small corporations outside the metropolitan area, but the eligibility pool is being expanded. The government also plans to give up to 3.6 million won per person for one year to large corporations outside the metropolitan area that hire young people.
The employment incentive will be paid only if a person completes the government-funded job competency program (K-New Deal Academy), gets a job, and remains employed for at least six months. The government said it would expand eligibility for the employment incentive so the job competency program can lead to hiring.
However, critics say giving subsidies to large corporations with ample financial resources is a waste of fiscal funds. There are also concerns that the approach of using public money to make up wage gaps between corporations has clear limits.
◇ Youth job leap incentive to go to large corporations and to young people hired in the metropolitan area
First introduced in 2022, the Youth Job Leap Incentive has seen its eligibility and scale expand each year. As of this year, if small corporations in the metropolitan area and mid-sized and small corporations outside the metropolitan area hire young people facing job-seeking difficulties who have been unemployed for at least four months and keep them employed for at least six months, they receive up to 7.2 million won for one year. Young people who find jobs at mid-sized and small corporations outside the metropolitan area receive up to 7.2 million won over two years.
Starting next year, mid-sized corporations in the metropolitan area and large corporations outside the metropolitan area were added to the eligibility list. However, they must hire young people who have completed the government-funded job competency program and keep them employed for at least six months. In this case, large corporations receive up to 3.6 million won per person for one year, and mid-sized corporations receive 7.2 million won.
The government also decided to pay up to 4.8 million won to young people who find jobs at mid-sized and small corporations in the metropolitan area. For young people who get jobs at mid-sized and small corporations outside the metropolitan area, who were already eligible, the subsidy rises to as much as 18 million won depending on the region.
A Ministry of Economy and Finance official said, "One of the cores of this youth employment policy is to reduce the 1 million won wage gap for entering small corporations, and young people are in that difficult a situation," adding, "In the case of large corporations outside the metropolitan area, we will specify detailed requirements."
◇ "Large corporations just end up taking the money… Fiscal resources should go to structural problems"
As eligibility and scale continue to expand, concerns are rising about the effectiveness compared with fiscal input. The argument is that giving subsidies to large corporations with sufficient financial capacity is a waste of public money.
Kim U-cheol, a professor of taxation at the University of Seoul, said, "National finances are limited, yet even corporations that originally planned to hire young people and have the capacity to do so will end up receiving subsidies," adding, "To avoid policy loss, support should be selectively provided to corporations on the fence about hiring depending on their capacity."
He also pointed out limits to policies that try to fill the wage gap between small and large corporations with fiscal funds. Lee Cheol-in, a professor in the economics department at Seoul National University, said, "Continuously expanding only cash-like support while leaving fundamental issues such as labor market structure or flexibility unaddressed is just looking for the easiest way," adding, "Inefficient fiscal spending when tax revenue may not continue to come in could cause other problems in Government Bonds and elsewhere."
Kim U-cheol at the University of Seoul also said, "If the support program is not just for this year, it is never desirable to inject a large sum at once," adding, "We need efforts to address structural problems and use fiscal resources effectively, such as increasing social insurance benefits like employment insurance for small corporations."