Ministry promises extra budget for jobs

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Ministry promises extra budget for jobs

The Ministry of Strategy and Finance said Friday that it would draw up a supplementary budget to help create jobs, a plan that President Moon Jae-in had pushed on the campaign trail.

During the race, Moon, from the liberal Democratic Party, vowed to pass a 10 trillion won ($8.8 billion) supplementary budget to create 810,000 jobs in the public sector.

On Friday, the ministry issued a monthly economic assessment report that said it would “help create jobs and shore up the economy through aggressive macroeconomic policies, including a supplementary budget.”

The move represents a reversal from the ministry’s stance in the past few months before Moon was elected. Finance Minister Yoo Il-ho had stressed that an extra budget was unnecessary thanks to strong exports, and in previous reports this year, the ministry didn’t suggest the possibility of a supplementary budget.

A reshuffle of financial policymakers is almost certain in the coming weeks, since the incumbent ministers and agency heads are holdovers from the conservative Park Geun-hye government. The statement from the Finance Ministry on Friday appears to be an attempt to set a policy tone in line with the new administration.

The timing is relevant since the country’s youth unemployment rate on Thursday hit 11.2 percent, the highest for April since 1999, when the government started compiling the data in its current form.

In its assessment of economic conditions, the report highlighted different headwinds.

“Despite strong exports and improved business sentiment, job market recovery remains slow, along with risks associated with trade issues and U.S. interest rate hikes,” it said.

The ministry’s economic assessment last month was more positive, saying indicators like investor sentiment, exports and consumption seemed to point to recovery.

When asked about details of the budget, Joo Hwan-wook at the ministry’s economic assessment division avoided direct answers.

“The division is preparing for legal requirements needed for approval of a supplementary budget,” Joo told reporters, “There will be other occasions in which the ministry can explain the plan in detail.”

Joo also noted that domestic consumption has remained sluggish. Retail sales remained flat in March, the latest month that data is available from Statistics Korea.

Domestic sales of automobiles made by Korean companies fell 6.3 percent in April from the same time last year while sales at department stores rose 0.5 percent.

While the budget may be devoid of details, there’s plenty in the government’s coffers for Moon’s administration to dig into, with tax revenue between January and March totaling 69.9 trillion won, up 5.9 trillion won from the same time last year.

Still, there remains the possibility that the legislature might not pass the budget drawn up by the ministry since the Democratic Party does not hold a majority in the National Assembly.

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