Extra budget will add up to 3.9 trillion won
“Youth unemployment stands at record high [at 9.8 percent] ... and if we neglect the 390,000 echo boomers that will flood [into the workforce population] until 2021 … the situation will be at a catastrophic level,” said Korea’s Finance Minister Kim Dong-yeon during a press briefing at the government complex in Sejong on Tuesday.
(Echo boomers is a Korean moniker for the children of the nation’s baby boom generation who were born from the early 1980s to the early 1990s.)
“In addition, unemployment rates in regions concentrated with [companies and industries undergoing] restructuring more than doubled,” Kim continued.
“[For such reasons] the government created [these] support measures in order to overcome the employment crisis that our economy is facing.”
Of the 3.9 trillion won total, 2.9 trillion won will be spent to help young Koreans find jobs and the remaining 1 trillion won to help workers and companies in areas such as Gunsan that are suffering from corporate restructuring following prolonged slumps in sectors such as shipbuilding and even automobiles.
This is the second year in a row that the Moon Jae-in administration has planned a supplementary budget focused on jobs. Last year, the government spent an extra budget of 11.2 trillion won to create quality jobs and improve working environments. Last year’s budget concentrated on creating jobs in the public sector, while this year’s has shifted its focus to the private sector.
The government will offer subsidies and tax breaks to newly-employed young people and small- and mid-sized companies that are struggling with a dearth of applicants and high employee turnover rates.
A proposal disclosed earlier this week came with small modifications to a plan announced last month.
For instance, the government initially planned to utilize private funds to provide loans for housing deposits of new employees of small- and mid-sized companies.
But in the plans announced Thursday, it said it would provide loans totalling 300 billion won out of its own coffers.
The ministry’s proposal includes other support measures not mentioned in the earlier plan. For example, the government will spend about 100 billion won to help job seekers become more competitive. This plan includes creating a space in Mapo District, Seoul, that will be used as an education hub and support center for people looking to find jobs or start companies in sectors considered part of the so-called “fourth industrial revolution” including artificial intelligence and blockchain. The government added the agricultural sector to that proposal.
“The source of the supplementary budget is from a budget surplus of 2.6 trillion won and residuals from government funds,” the finance minister said. “There will not be any additional burden on the public nor will it hurt the financial soundness of the country since we won’t be relying on additional taxes or issuing more government bonds.”
Kim stressed that the 2.9 trillion won is about the same size as the entire budget for youth employment set for this year, which was 3 trillion won.
Still, concerns remain whether the government will get many results after spending a substantial amount of money.
“A structural response is crucial [in addressing the root of the issue],” said Ko Hyoung-kwon, first vice minister of strategy and finance, when asked whether the plan would improve conditions over the long run. “This cannot be done just by financial support and [we believe] the measures to support our youth can also help small- and mid-sized companies become more competitive [in the long run].”
The government on Thursday also designated six areas as regions in crises. The areas are Geoje City, Tongyeong City, Goseong County, Jinhae District in Changwon City and Dong District in Ulsan City, all of which have been affected by a protracted slump in the global shipbuilding industry, and Gunsan, home to an assembly line of GM Korea. The company announced it will shut down its plant there by the end of next month.
Companies in the region will receive government subsidies and tax benefits if they don’t cut jobs or create new ones. The government will subsidize as much as 90 percent of the wages paid to workers if companies under stress give them paid leaves.
The ministry is submitting the proposal to the National Assembly today for approval.
BY CHOI HYUNG-JO [email@example.com]