Record spending to somehow create jobs
According to the Ministry of Economy and Finance on Tuesday, next year’s jobs-related budget has been set at 23.5 trillion won ($21.2 billion), a 22 percent increase from this year’s 19.2 trillion won, which was a record amount of spending on jobs.
The overall budget is 9.7 percent higher than this year’s, a record 470.5 trillion won.
“The jobs-related budget was increased 22 percent with focus on creating direct jobs for those in vulnerable situations like the elderly, women and people with disabilities,” Finance Minister Kim Dong-yeon said Tuesday during the announcement of the 2019 budget in Seoul. “We are spending more on establishing the conditions for creating jobs indirectly such as expanding and extending unemployment paychecks, job training and helping middle-aged people get new jobs.
The government increased its budget for encouraging job opportunities in the private sector.
This includes a 1.37 trillion won budget to help young people apply for jobs at SMEs, which is a 191 percent increase from the 355.4 billion won being spent this year. It funds a program, which was introduced in 2016, in which a young person who lands a job at an SME will be able to save 16 million won over two years of employment. The government pays 9 million won and the company 4 million won when the employee saves 3 million won during the two years. The amount goes up to 30 million won for those who land three-year contracts. The government pays 18 million won and the company 6 million won when the employee saves 6 million over three years.
Additionally, the government has increased the budget to give subsidies to SMEs that hire people under the age of 35. A company can get as much as 9 million won a year for each new hire.
That budget has been increased 271 percent from 192 billion won to 713.5 billion won.
The government also plans to spend 1.5 trillion won in creating jobs for women, such as taking care of senior citizens, as well as 820 billion won on jobs for senior citizens. It hopes to increase jobs for women from a target of 120,000 this year to 136,000 next year, and for senior citizens from 510,000 this year to 610,000 next.
The government is expanding jobs in social services offered by the public sector, such as day care, as well as upgrading contract workers to the regular payroll, which gives them benefits such as health insurance and employment insurance.
The government increased its industry, SMEs and energy budget 14 percent to 18.6 trillion won. It increased its budget for R&D to 20.4 trillion won, a modest 3.7 percent rise.
The health, welfare and employment budget, which includes the 23.5 trillion won spending on jobs, has been increased 12.1 percent to 162.2 trillion won. Even when excluding the jobs budget, it grew more than 10 percent. The health, welfare and employment budget is the largest component of the budget as a whole, accounting for 34 percent.
The only area that is seeing a decline was infrastructure projects, also known as social overhead capital, or SOC. The government cut the SOC budget 2.3 percent to 18.5 trillion won. If the government budget is approved by the National Assembly, it will be the fourth year in a row that the SOC budget has been downsized.
The Moon government began in May 2017 with a vow to focus on creating quality jobs with better pay, especially for the young and those in lower income brackets. It said their spending would boost demand and ultimately supply, establishing sustainable yet balanced economic growth.
Since 2017, the government has planned spending of 51 trillion won, including two supplementary budgets, one last year and another earlier this year, hoping to turn around the job market situation.
Instead, its policies - particularly a steep increase in the minimum wage - seem to have killed jobs. The latest job report said that only 5,000 jobs were added in July compared to around 300,000 in most months last year.
Critics have called for the Moon government to abandon its income-led growth policy. But Moon on Monday doubled down during a cabinet meeting, stressing that next year’s budget was focused on making the income-led growth policy work.
“We reflected the amount needed in encouraging jobs in the private sector, the basic pension, disability pensions and childcare support as well as support for small business owners, [which all are] for income-led growth in next year’s budget,” Moon said.
He stressed that economic recovery is the government’s mission.
BY LEE HO-JEONG [email@example.com]