Good intentions go badWe are flabbergasted to find that last year, the government wasted much of the money spent to ameliorate side effects of the big minimum-wage hike. According to a JoongAng Ilbo investigative report, the government secured a budget of 2.97 trillion won ($2.64 billion) to help small businesses affected by the wage hikes.
But the Korea Workers’ Compensation & Welfare Service (Kwcws), a body under the Ministry of Employment and Labor responsible for giving the money to companies that needed it, used all types of means to exaggerate its performance. When applications for the subsidies were less than expected, it changed related guidelines up to 20 times. In the beginning, companies with fewer than 30 employees were eligible for the benefit, but the Kwcws allowed companies with more than 30 employees to apply for the subsidies. Later, it enabled business owners to apply for the fund even after their workers left.
Some of the money was also paid redundantly for totally incomprehensible reasons, including computing errors. At the end of last year, the Kwcws even sent money to business owners who had yet to apply for the subsidy. As a result, 84.5 percent of the budget was implemented in December. That reminds us of local governments’ terrible practice of digging up solid paving blocks on the street to spend their remaining budget at the end of the year.
And then 450 billion won was left over. That’s because business owners wanted to avoid responsibility for paying half the monthly premiums for insurance on behalf of their employees. If employers and employees are not insured, they cannot receive the subsidy. Last year, over 1 million owners of small companies shut down their businesses.
Unfortunately, the shabby practices of the Kwcws will almost certainly be repeated this year. The National Assembly unanimously passed a 2.82 trillion-won budget for 2019 without any scaling back thanks to the opposition parties’ support for the subsidy because they need votes from small enterprises. If people’s tax money is wasted like that, taxpayers will be outraged.
The government raised the budget with good intentions. It wanted to help ease the financial burdens on small companies after the minimum-wage hikes. But good intentions don’t guarantee good results. The government must look into how the money was spent. It all began with the government’s push to raise the minimum wage. It must not repeat its mistakes of last year.
JoongAng Ilbo, Jan. 18, Page 30