The South Korean government said on Thursday (Mar 15) that it will propose a supplementary budget and boost business subsidies, as part of the efforts to cut the country’s high youth unemployment which is reaching a dangerous level.
Under the proposal, small- and medium-sized businesses (SMEs) will be eligible to get 9 million won (S$11,070) in annual cash subsidies for each entry-level job it creates over the next three years. This amount suggests about 34 percent rise from current 6.7 million won. High school and university graduates will also be able to receive bigger subsidies during job-searching. Subject to certain conditions, they will also be exempt from income taxes for the first years of full-time employment.
By offering more tax and cash incentives, President Moon Jae In expects to improve the prospects for Korean millennials to secure a job amidst the challenging job market conditions. According to him, youth unemployment has forced many people to postpone marriage and pushed into poverty.
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Regarding the matter, the country’s finance ministry said it will announce the size of the proposed additional budget package and other details later. In a press conference held on Wednesday (Mar 14), vice finance minister Ko Hyoung Kwon said, “Unless addressed, (youth unemployment) will reach a disastrous level in about four years. So that warrants a supplementary budget by the National Finance Act.”
The data noted that youth unemployment in South Korea has hit a record 9.8 percent in 2017, almost three times the national rate of 3.7 percent. This figure is also worse compared to 4 percent youth unemployment rate in Japan, as well as 8.1 percent in the United States. A broader youth unemployment rate that also counts those in between jobs seeking full-time employment was at 22.7 per cent in February, Reuters reports.
As South Korea has the fastest ageing population among Organisation for Economic Co-operation and Development (OECD) nations, the policymakers are urged to boost income for young South Koreans. This move is made as it seeks to broaden its tax revenue base to fund welfare costs for an ageing population.
President Moon has budgeted an extra spending of 11 trillion won as soon as he took office in 2017, in a push to generate social service jobs and provide subsidies for maternity leave. However, his administration faces a hurdle in passing the extra budget bill in parliament, where his Democratic Party holds only 41 percent of the 293 seats.
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