The Korea Federation of Small and Medium Businesses announced the results of the ‘Small and Medium Enterprises Employment Retention Subsidy System Utilization Status and Opinion Survey’ conducted to understand the actual situation of SMEs’ use of the employment maintenance subsidy system and difficulties in the field.
This survey was conducted from the 8th to the 17th, targeting 300 small and medium-sized enterprises (SMEs) that had experienced difficulties in maintaining employment after the spread of the coronavirus.
As a result of the survey, 61.6% of small and medium-sized enterprises (SMEs) responded that they had difficulties in using manpower when using the employment maintenance subsidy system.
According to the current system, companies are burdened with restrictions on the use of manpower, such as having to take a leave of absence or taking a leave of absence in order to receive employment maintenance subsidies.
In particular, among the companies that used the employment maintenance subsidy system in the past, there were cases where it was unavoidable, responding ‘because the application period has expired (35.7%, 1st place)’ as the reason for not using it now. The response was ‘because the punishment is strict (22.9%, 2nd place)’, and there were also a significant number of cases where companies did not voluntarily use it.
As an alternative to the employment maintenance subsidy system, 63.7% of the respondents answered that it is necessary to introduce a ‘Korean-style PPP (Paycheck Protection Program)’ system, which can receive labor cost support only if the employee maintains employment without suspending or taking a leave of absence. ‘ was only 12.0% of the responses.
The Korean PPP system is a system that provides loans for labor costs so that SMEs can utilize their core workforce without suspending or taking a leave of absence.
The most necessary item to improve the employment maintenance subsidy system was found to be ‘extension of the support period (28.4%)’.
In the case of special employment support industries that are relatively more affected by COVID-19, 85.7% of the respondents said that the application period needs to be extended.
Regarding the government’s decision to cut the budget for the employment maintenance subsidy in half the next year, 78.4% of the respondents answered ‘negative’, indicating that the demand for the job maintenance subsidy system is still high.
Lee Tae-hee, head of the Smart Jobs Division of the Federation of Small and Medium Businesses, said, “Most SMEs that use the employment maintenance subsidy are struggling to keep their workers employed even in the midst of severe economic difficulties.”
He added, “Excessive regulations and punishments on the use of manpower are making it more difficult to overcome the prolonged crisis. “There is a risk that it will have a negative impact on job retention by making companies avoid using the employment maintenance subsidy system,” he said.