Budget for jobs draws skeptics

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Budget for jobs draws skeptics

Eight billion won ($7.14 million). That’s the amount that the government is planning to spend to hire 4,500 civil servants for the central government, including police officers and military employees. That amount is just a fraction of 0.1 percent of the total 11.2 trillion won supplementary budget that the government has designed to realize President Moon Jae-in’s promise of establishing an economic structure where growth is fueled by higher income stemming from job security.

That spending, however, does not include wages or other welfare that the government has to cover with taxpayers’ money. Basically, it means spending made to hire new civil servants will inevitably grow.

“Since most of the hiring will be taking place in the second half, the first paycheck [of the new civil servants] will be handed out next year,” said Park Chun-sup, head of the budget hearing department at the Ministry of Strategy and Finance. “That’s why in the supplementary budget we have only included costs that are necessary in the hiring process like exams and training fees.”

The supplementary budget is significant for the Moon administration as it is its first economic policy that’s the president is pushing forward.

However, even before being turned over to the National Assembly for approval, the supplementary budget is already being questioned not only for its necessity but also its practicality.

Some of the questioning includes whether it is appropriate for the government to try to solve the current job situation by increasing the number of public servants that will undoubtedly lead to larger government spending and more burdens on the public.

While the government has assured that the supplementary budget comes from the additional taxes collected in the previous year and it will not increase government debt, it noted that it would cost roughly 120 billion won every year in labor costs for the newly added civil servants. That figure is likely to grow as President Moon plans to increase the hiring of new civil servants to 174,000 by the end of his term in five years.

“It is necessary to use financial stimulus to solve the labor market problems,” said Park Jin, an economics professor at KDI School of Public Policy and Management. “But increasing the number of civil servants, which will add a financial burden at least for the next 30 years, is not the right approach.”

Jin said it would be better for the government to focus on creating jobs through finding new growth engines.

It is on this same argument that the opposition parties have been opposing the government budget proposal.

“The government is destroying the principle of managing the nation’s finances by pushing the supplementary budget,” said Lee Hyun-jae, policy chief of the Liberty Korea Party. “About 15 to 20 years from now, the government will have to pay about 11 trillion won a year for 12,000 newly hired civil servants.”

The People’s Party and Bareun Party have argued that the additional hiring of civil servants would only disrupt the economy, as it would only increase the number of young Koreans, who should be searching for jobs, studying for civil servant exams.

Neighborhoods like Noryangjin in southern Seoul, where a cluster of private institutions catering to people preparing for civil servant exams, have been crowded with people signing up for classes. Some have even quit their current jobs to study as civil servant positions are popular for their job security.

More students hitting the books will lead to less consumption and affect economic momentum, analysts say. Some have even raised the possibility that as more people take the exam, the opportunity for those in the low-income households of passing the civil servant exam will narrow.

Critics questions whether the supplementary budget should have been rushed and whether it is practical, especially since the budget was designed in less than a month.

The Blue House has pointed out the need for urgency in quickly solving shortages in the job market, especially as it is affecting the nation’s economic growth while widening the gap between the haves and have-nots.

But there are those who ask, if the supplementary budget is designed only to finance the hiring process, why not put it in next year’s budget when spending becomes necessary as it would include wages provided to the newly hired civil servants.

“I think it is more reasonable to include such budget at the next year’s official budget rather than the supplementary budget,” said Pyo Hak-gil, professor emeritus of economics at Seoul National University.

Some also question how effective the budget will be. Among the 86,100 jobs that will directly be created under the supplementary budget, 66,000 are in the public sector and half are temporary jobs. This includes jobs for senior citizens, who would receive 270,000 won, up from the current 220,000 won.

“They need to consider whether it is a right way to solve the structural problems in the labor market through temporary measure of supplementary budget,” said Bae Hyeon-kee of the Hana Institute of Finance. “But I also believe it is necessary to expand the number of firefighters and police officers.”

BY PARK JIN-SUK, PARK SUNG-HOON AND KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]

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