South Korea Launches US$10 million Fiscal Package to Boost Economy and Create More Jobs

June 6, 20178:24 am482 views

The Government of South Korea is offering a US$10-million economic stimulus to promote job creation, increase social welfare subsidies and deliver on President Moon Jae-in’s election promise to create 810,000 public sector jobs, Channel News Asia reports.

However, Moon’s ruling Democratic Party is facing challenge to pass the extra budget bill as it holds only 40 percent of the 299 seats in the National Assembly and would need the support of more than 30 opposition lawmakers.

The Bareun Party and the Liberty Korea Party in the opposition believe that, the plan does not meet legal requirements and increased welfare spending could become unsustainable. This stimulus package allocates 5.4 trillion won to create public sector and social services jobs, to include places for fire fighters, teachers and postal workers, the finance ministry said.

Another 2.3 trillion will be used to provide medical subsidies for elderly care and maternity leave. The government estimates this extra spending to boost economic growth by 0.2 percentage points this year. This extra budget is expected to add 71,000 jobs to the public sector workforce and 15,000 jobs to the private sector.

See: Asia Sees Widening Salary Gap Between the Top Management and Junior Staff

Park Chun-sup, South Korea’s chief of budget spoke at a news conference- this is the first supplementary budget for job purposes. A widening income gap and sluggish domestic demand is a major challenge for policymakers, especially as exports have only just begun to turn around after falling for almost two years.

This supplementary budget will add on to the 400.5 trillion won approved by the National Assembly late last year, and the budget plan proposal will be submitted to the National Assembly on June 7.

Although the proposed extra budget is only for this year, the government is under pressure to raise taxes to sustain expanded welfare programmes and to meet the growing needs of an ageing population.

Lee Yong-sup, the head of President Moon’s jobs committee believes, South Korea needs to raise taxes in order to pay for more jobs and welfare. He further added that, the call for government subsidies will only increase as more than 35,000 workers are expected to be laid off by the end of this year from the shipbuilding industry alone.

South Korea’s economy has been steadily improving this year on the back of a rebound in global demand for Asian goods. The jobless rate for young South Koreans aged 15 to 29 has recently lingered in the double-digit range.

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Feature image credit: freedigitalphotos.net

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