Budget focuses on jobs, incentives to have kids
The real life solutions include installing air conditioners in barracks of young Koreans doing their mandatory military service as well as increasing financial aid for fathers taking a break from work to raise children and expanding financial aid for infertility treatment.
As the government promised earlier this year, it has increased its budgets for welfare, taking care of infants as well as job creation and investment in new industries such as autonomous vehicles, virtual reality, augmented reality, and the Internet of Things.
The Korean economy has hit its limits with conventional manufacturing industries and the country’s economically active population is shrinking.
The government has cut back on state-led infrastructure projects, including constructing roads and bridges, which the government relied on in the past when the economy faced hardships.
“We have drawn up the 2017 budget to be as expansionary as we can without damaging our fiscal soundness in the mid- to long-term,” said Finance Minister Yoo Il-ho in announcing next year’s budget at the government complex in downtown Seoul on Tuesday.
“We have centered [the budget] on creating jobs and restoring economic vitalization.”
The government has minimized the budget increase to keep its debt ratio in the current 40 percent range.
According to the Ministry of Strategy and Finance on Tuesday, the budget for 2017 has been set at 400.7 trillion won ($359 billion), up 3.7 percent compared to this year’s. This is the first time that the budget has exceeded 400 trillion won, eight years after it surpassed 300 trillion won for the first time.
130 trillion won has been set aside for national health, welfare and labor. Although it is not the sharpest increase among the budget items, this is the largest amount of spending as it accounts for 32.4 percent.
The government has allocated 17.5 trillion won to help create jobs. This is up 10.7 percent compared to this year’s budget. The government made a similar move last year when it increased this year’s budget on jobs 12.8 percent compared to 2015.
The government has allocated 63.5 billion won to create jobs in the game industry and 19.2 billion won for the VR industry. While the budget set for the game industry is a 41 percent increase, compared to the 45.1 billion won for this year, the VR budget is new.
The government has also increased the job budget for the biomedical technology development industry 34 percent from 195 billion won to 261.6 billion won.
The government wants to encourage companies to adopt flexible working hours or allow employees to work at home, especially for women with small children.
The government has raised financial aid to a maximum of 400,000 won per person a month who works flexible hours or at home. The maximum number of such people the government will support are 15 per company.
This year the financial aid for flexible hours was a maximum of 300,000 won per month while for working at home it was 200,000 won.
Additionally the government will be guaranteeing a maximum 20 million won of loans and lending as much as 40 million won to companies that will invest in establishing the infrastructure needed for working at home or working outside the office.
The welfare and labor budget extends financial aid for infertility treatments that were previously limited to low-income households. For lower income households, the financial aid limit for infertility treatments has been raised from this year’s 1.9 million won to 2.4 million won. Single parents raising children will also receive 120,000 won a month compared to this year’s 100,000 won.
To find growth areas for the economy in the future, the government has raised the budgets on R&D from this year’s 19.1 trillion won to 19.4 trillion won, and 30 billion won will be spent on nine projects including VR and AR. The ultimate goal is to invest 1.6 trillion won in the nine fields through 2026.
Also noticeable in next year’s budget is the increased spending on defense, security and safety. After a heat wave hit the peninsula this summer, the government has allocated 39.9 billion won for installation of 30,709 air conditioners in military barracks.
This year, the government spent 18 million won installing air conditioners for the military. Additionally, the government is spending 1 million won on distributing cooling jackets to 635 people serving at guard posts (GP) and general outposts (GOP) along the demilitarized zone (DMZ).
On the flip side, the government cut 8.2 percent of spending on large-scale infrastructure projects, referred to as social overhead capital (SOC). This is the largest cut the SOC budget has seen.
Industry, SMEs and the energy sector saw its budget cut 2 percent largely from a slashing of funding of overseas resource development, which is viewed as a failed policy of the Lee Myung-bak administration. The government also cut 1.5 percent from the diplomacy and unification budget.
BY LEE HO-JEONG, KIM YOUNG-NAM [firstname.lastname@example.org]