The government said Friday that it will offer financial subsidies for young people looking for jobs, in partnership with the state-run Youth Hope Fund, overturning its initial stance that handing out “cash” could create “moral hazards.”

The Ministry of Employment and Labor will offer funds of up to 600,000 won ($544) over three months to help job seekers cover expenses when attending job interviews under the program called “Successful Job-landing Package,” minister Lee Ki-kwon said at a news briefing at Seoul Government Complex.

The ministry explained that it drew up the measure as many job seekers find the job search process difficult due to lack of money to cover the costs for taking photos for job applications and borrowing suits for interviews.

According to a poll on 873 people by job portal site Saramin released in November, a job seeker spends 60,000 won to prepare for each job interview. Nearly 70 percent of those surveyed said that they felt expenses were a “burden” and 30 percent gave up on attending job interviews due to financial problems.

The announcement came amid mounting controversies over the Seoul Metropolitan Government’s implementation of the “Youth Allowance.” The Ministry of Health and Welfare has been opposing the program, ordering the city government to cancel the project and take back the money already distributed to 2,831 applicants.

In what many see as a similar program, the municipality provides 500,000 won per month for up to six months to some 3,000 selected young people, who have lived in Seoul for more than a year, work less than 30 hours a week and are aged between 19 and 29.

The Labor Ministry, however, drew a clear distinction between its scheme and Seoul City’s version.

“It is serious that youth looking for a job give up on taking part in job interviews due to financial difficulties,” the minister said.

“But Seoul City’s ‘Youth Allowance’ would take away job opportunities (from the young) because it does not set the young’s participation in job searching efforts as a precondition,” he said.

“Seoul’s plan also broadly acknowledges individual activities unrelated to finding employment, it is highly probable that the youth are just settling for cash subsidies rather than actively look for a job.”

Lee also said that some 35 of about 110,000 participants in the ministry-led job support program cancelled their application to apply for Seoul City’s “Youth Allowance” as the ministry does not offer support for expenses. 

The Seoul Metropolitan Government welcomed the Labor Ministry’s plan, saying that it corresponds to the principle of the municipality’s program.

“As the central government is rolling out a measure that is rarely different from Seoul City’s policy, the Ministry of Health and Welfare should withdraw its decision to cancel the ‘Youth Allowance’ program,” an official from Seoul Metropolitan Government said. “We will cooperate with the central government if there is common ground.”

Under the current program, job seekers received cash in the first and second stage of their nine-month-long job consulting program encompassing counselling, vocational training and internship.

The new plan, which will take effect in September, will benefit some 24,000 job seekers chosen by counsellors at job centers. The Youth Hope Fund will provide the budget of 7.4 billion won for the program.

The unemployment rate for people between the ages of 15 and 29 stood at 9.2 percent in August.

By Ock Hyun-ju(laeticia.ock@heraldcorp.com)