Provincial governments are competing to increase cash welfare provisions. According to the Budget Settlement Committee of the National Assembly, the central government’s 2020 budget for programs that pay cash directly to people, such as the youth allowance to fund young people’s job-seeking activities, increased 12.5 percent to 54.3 trillion won.
The cash payment budget rose modestly 5.9 percent in 2017 when President Moon Jae-in’s government was launched, then surged 14.9 percent in 2018 and 16.6 percent in 2019.
More serious are local governments’ mushrooming cash welfare programs.
The office of Haenam County in South Jeolla Province began in June to give each farming house in the county 600,000 won ($516) as a farmer allowance for the first time in Korea. National and regional farmers’ lobbies urged the expansion of the allowance. About 40 other local governments followed suit within a month.
The municipal government of Wonju in Gangwon Province gives 50,000 won each quarter to every household consisting of three generations living under one roof, with a grandparent aged 85 or older. The justification Wonju gives for this cash allowance is to encourage filial behavior. The offices of the Gangdong and Seodaemun districts in Seoul give similar cash allowances to residents.
The office of Gurye County in South Jeolla Province distributes 200,000 won to 99-year-old seniors as a birthday gift. It also gives a 200,000 won funeral expense subsidy when a resident aged 99 or older dies.
There is a case of cash allowances carried to the extreme. The city hall of Jeongeup in North Jeolla Province decided to pay 100,000 won each month from next year to every descendant of deceased farmers who joined the Donghak Peasant Revolution that happened in 1894 -- 125 years ago.
The city says Jeongeup has become well known as one of several sites where the revolution raged and as a result many tourists visit the city. But critics ask sarcastically: If descendants of participants in the revolution receive cash compensation, why not descendants of those who joined other historical revolutions or battles to defend the country? This cash allowance arouses concerns the government is spending taxpayers’ money carelessly.
With local governments increasing cash welfare, a significant portion of related budgets of central and provincial governments is found to overlap. For example, even as the central government gives a basic pension to seniors in need each month across the country, some local governments pay cash to the elderly via additional programs with different names.
Overlapping cash welfare programs are estimated to amount to as much as 23 trillion won, more than 40 percent of next year’s total cash welfare budget.
Meanwhile, the number of households receiving cash welfare benefits surged, while that of households earning income plunged.
According to Rep. Choo Kyung-ho of the main opposition Liberty Korea Party, more than 8.43 million households received cash welfare benefits in the third quarter. The figure accounts for 45.1 percent of the total number of households. It rose about 10 percentage points in two years from 35.7 percent in 2017.
On the other hand, the proportion of income-earning households fell to an all-time low of 68.7 percent. This is proof of economic policy failure.
Likely the current government knows well that ever-growing welfare programs will be unsustainable someday. Still it has continued to expand welfare projects even as the economy staggers.
Considering it was launched with an emphasis on a welfare state, President Moon’s administration was expected from the beginning to increase the welfare budget to some extent, but it is going far. The central government should keep local governments from proliferating populist programs, but it looks on, sometimes inciting cash welfare.
So, it is no wonder that the Moon regime comes under suspicion and criticisms that it has increased the welfare budget to win over voters with cash allowances ahead of next year’s general election. “The current government seems to believe that if it can make only 20 million people dependent on the government, it will then have no difficulty maintaining power,” a former Cheong Wa Dae official told a newspaper.
There are also concerns that Korea may be following in the footsteps of some Latin American countries that have gone broke because of leftist populism.
Cash welfare is a double-edged sword. It is essential for the survival of the poor. However, as it snowballs, so does the burden on taxpayers. The government is condescending, but the people carry the load. Cash welfare will also break the will to work. Once expanded, it is hard to roll back. When it comes to cash welfare, prudence is warranted.
It is abnormal for people to look forward to welfare benefits eagerly rather than to income they earn. The government must curb cash welfare and focus on creating decent jobs in the private sector by reviving the economy.