Fiscal-fix addictsSouth Korea’s national debt reached a record 1,682 trillion won ($1.48 trillion) last year, up 127 trillion won from 2017. Three-fourths of the whopping 8.2-percentage-point increase in our national debt resulted from budgets spent to cover a shortage of funds for pensions for civil servants and veterans. The remarkable increase of our national debt owes much to the Moon Jae-in administration’s drastic increase of government employment to create jobs in the public sector. The pace of the increase in government debt from public pensions is the fastest since 2013. The government’s relentless push for more civil servants has boomeranged.
Nevertheless, the administration puts the blame on low interest rates. Due to the lower rates, the size of government debt increased only in numbers, it claims. That’s sheer sophistry: low interest rates prevailed in the former Park Geun-hye administration, yet government debt from the budget needed to make up for deficits in public pensions only increased by 16.3 trillion won in 2015 thanks to painstaking reforms of the civil servants pension system. The fiscal reforms could have saved 333 trillion won over the next 70 years if all went well.
Yet such a belt-tightening campaign came to a halt since the launch in 2017 of the liberal administration bent on growing the public sector. If the government stretches the number of civil servants by 174,000 by 2022 — including 30,000 this year alone — the debt to compensate the shortage of funds for their pensions will snowball. The problem is not only an astronomical amount of payments for them, but a growing government debt from budgets needed to make up for the shortage of funds for their pension.
As the law stipulates the government should compensate for the loss in civil servants pensions with taxes, our next generation will bear a bigger tax burden as the number of government employees increases. The government is considering a supplementary budget again just three months after it drew up a 470-trillion-won super-sized budget at the end of last year — a 9.7-percent increase from the previous year. The administration relies on extraordinary budgets to create jobs for the underprivileged. It can hardly avoid criticism for being an “addict to fiscal tools” whenever the need arises.
The head of a civic group aimed at improving the livelihoods of young people said before President Moon with tearful eyes that the government does not seriously consider the hardships of the young. We hope the government can wipe their tears instead of resorting to quick fixes.
JoongAng Ilbo, April 3, Page 30
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