"Domestic Service Cost Likely to Increase by 30%”
Five million two-earner couples on watch
Domestic service workers are also workers…
Severance pay and 4 major insurance must be guaranteed
Reporter, Kim Hee-rae, Park Dong-hwan
Increasing cost of domestic service providers seems most likely to pass on to consumers
The government claims to address welfare blind spot. But in the end, it only breaks the users’ backs.
To prevent a sharp increase in costs, existing job placement method will also be allowed.
Domestic service workers, who were in the blind spot of the employment safety net, will be recognized for their status as workers, including minimum wage, social insurance, severance pay, and annual paid leave. However, as the cost of household services is expected to rise by up to 30 percent, concerns are raised that the increased burden will be passed on to two-earner couples, who are the main consumers of Domestic service.
According to the National Assembly on the 21st, the plenary session of the National Assembly voted on a bill to enact ‘Employment Improvement Act for Domestic service workers (Domestic service workers Act).’ When the legislation is promulgated, it will go into effect a year after the preparation period.
With the passage of the legislation of the Domestic Service Workers Act, domestic service workers who sign a labor contract with an agency providing domestic services are guaranteed the right to minimum wages, social insurance such as employment insurance and industrial accident insurance, severance pay, and annual paid leave. Domestic service providers shall hire domestic service workers as paid workers, and only corporations with compensation allowances for personal and material damages that may occur during service provision will be certified. The contract for the use of domestic services shall be concluded in writing.
The government expects that the passing of the Domestic Service Workers Act will further boost the care labor market. However, for the choice of the domestic service workers or users, the provision of domestic services in the existing job placement method will be also allowed.
On the same day, a group related to domestic service workers jointly issued comments and welcomed this move. The Korea Domestic Service Workers’ Association and the Korea YMCA Federation said, “This is a new day for the history of Korean workers. It will play a big role for the stable jobs of the elderly."
It is meaningful in the sense that domestic workers, who were not recognized for their status as workers, came into the boundaries of the law, but the issue of rising costs remains to be solved.
This is because service fees have risen steadily over the past five years due to the supply shortage in the domestic worker market, and domestic service fees such as child care and cleaning have skyrocketed as the entry of Chinese compatriots has decreased due to the aftermath of COVID-19 last year.
Currently, the monthly salary of a babysitter, usually working from 9 a.m. to 6 p.m., is formed at an average of KRW 2 million per month. If extra work such as cleaning and etc., KRW 300,000 to 500,000 is added normally. Considering that the average monthly income of urban workers(based on a two-person households) was KRW 4,562,535 as of last year, more than half of the monthly income will be spent as domestic workers expenses if one chooses to use babysitter service.
The industry and the government expect that the passage of the Domestic Service Workers Act will raise the domestic service fee by 30% and 10%, respectively. This is because the expenses borne by the agencies that provide domestic service, such as severance pay and four major insurances, are higher than before.
In response, Kim Yong-chun, head of the employment policy team at the Korea Economic Research Institute, said, "The purpose of the Domestic Service Workers Act is good, but the cost burden can be passed on to service users." "As the number of two-earner families increases, the burden of childcare and housekeeping expenses may increase, which may have the effect of reducing individual disposable income.” He also added, "For companies that employ domestic workers, profitability may deteriorate due to a sudden increase in cost burden."
The Ministry of Employment and Labor plans to come up with measures for such cost increases. The Minister of Employment and Labor Ahn Kyung-deok said, "It will serve as an opportunity to protect domestic service workers and revitalize the market for high-quality domestic services," and said, “We will prepare lower statutes and secure budgets so that the Domestic Service Workers Act can be implemented without a hitch."
Earlier, the Ministry of Employment and Labor also ordered research services on how to legalize the employment of domestic service workers to foreigners, including Southeast Asians.
Maeil Business News : https://www.mk.co.kr/news/economy/view/2021/05/491909/
