The South Korean government and ruling party on Thursday agreed to propose what they called “the largest-ever” job creation-focused budget for next year, gesturing to spend more funds into supporting low-income clusters.
“Considering the favorable tax revenues and sound fiscal soundness, we decided to operate next year’s budget as expansively as possible for the sake of job creation, social safety network and regional economy revitalization,” Rep. Kim Tae-nyeon, chief policymaker of the ruling Democratic Party of Korea, said in a briefing.
In a budget meeting earlier in the morning, the Ministry of Economy and Finance and the Democratic Party consented to maintaining the current expansionary fiscal policy tone, sharing the view that further government funds are needed to reduce income inequality and to create a sustainable growth momentum.
The youth employment budget is to take priority in the yearly budget, while further funds will be operated to expand the number of jobs in the social service sector. Some 15,000 staff will be additionally hired in child care centers, should the budget proposal take effect.
The budget allocated to improving long-term public rental residences will also be increased by 20 billion won ($17.8 million) to 50 billion won.
Finance Minister Kim Dong-yeon speaks at a parliamentary budget committee on Thursday. (Yonhap)
The monthly pension for the physically disabled will be raised to 300,000 won starting next year. The previous timeline was to incrementally raise the amount to 250,000 won this year and to 300,000 won in 2021.
“Expansive fiscal operation is necessary in order to add fresh fuel to income-led growth and innovative growth,” said floor leader Rep. Hong Young-pyo, claiming that further fiscal input is inevitable in order to fundamentally change the country’s economic constitution.
Deputy Prime Minister and Finance Minister Kim Dong-yeon, who had previously expressed concerns over the minimum wage hike and other expansive measures, pledged full support.
“(The government) will expand the employment-related budget to the highest level possible so as to play an active role in creating jobs in the public and private sectors,” the minister said in his keynote address.
The fiscal policymaker also underlined the need to add momentum to the innovative growth initiative -- one of the Moon Jae-in administration’s key economic slogans.
“Over 5 trillion won will be invested into key businesses including artificial intelligence and the nation’s research and development funds will be raised to 20 trillion won or more,” Kim said.
“An additional 7.4 trillion won is to be injected into unemployment allowances to alleviate the job crisis.”
South Korea created about 5,000 jobs in July, marking the lowest figure in over eight years, as the nation confronts the fallout of corporate restructuring and stagnant domestic demand, data showed last week.
The unemployment rate stood at 3.7 percent last month, up 0.3 percentage point from a year earlier, according to the report compiled by Statistics Korea.
The latest budget plan announcement rekindled the backlash from the largely conservative opposition camp.
“The government keeps inserting funds, without realizing that the real problem lies in its economic policy frame,” said the main opposition Liberty Korea Party’s interim chief Kim Byung-joon at a party meeting.
By Bae Hyun-jung (email@example.com