The South Korean Ministry of Strategy and Finance has drawn up an 11.2 trillion won (US$10.02 billion) supplementary budget to help meet South Korean President Moon Jae-in’s effort to increase jobs and incomes.
If passed by the parliament, the ministry plans to use 4.2 trillion won of the spending package to create 86,000 new jobs, 71,000 of them in the public sector, including positions for police officers, firefighters, assistant teachers and social workers.
The focus in the private sector would be generating more jobs at small and mid-size companies. The remaining 7 trillion won would go into welfare, improving working conditions, raising wages and local subsidies, and is projected to produce 24,000 jobs indirectly, the ministry said in a statement.
“We’re at least going in the right direction,” said Lee Sang-jae, an economist at Eugene Investment & Securities Co in Seoul. “But the problem is how do we create jobs in the private sector, not the public sector.”
Lee added that Korea does not have the option of weakening its currency to boost industry as Japan did, because there would be a backlash from US President Donald Trump’s administration.
The package is aimed at helping the unemployed, particularly young people, but also the elderly and women, South Korean Deputy Finance Minister for Budget Affairs Park Chun-sup said.
“If more jobs are created, we believe it will lead to an increase in wages, which can help solve the problem of low domestic consumption,” he said at a briefing held in Sejong on Friday.
While Moon’s election victory last month gives him a clear mandate to create jobs, passage of his plan through parliament is not guaranteed, given that his Democratic Party holds just 40 percent of seats.
The ministry plans to submit it to the legislature tomorrow.
Only six of 12 economists polled by Bloomberg last month were confident that the new administration would manage to pass its budget plans.
South Korea’s KOSPI fell 0.1 percent at 11:34am yesterday, while the Korean won advanced 0.3 percent.
Youth unemployment has worsened considerably in South Korea in recent years. The jobless rate for those aged 15 to 29 was 11.2 percent in April, rising 0.3 percentage points from a year earlier and more than double the rate for the entire working population.
“Moon’s administration said it will mainly create regular jobs, and if that’s the case, creating 110,000 jobs either directly or indirectly will be hard,” said Moon Jung-hiu an economist at KB Investment & Securities Co in Seoul. “But if it’s temporary jobs they’re talking about, then that many jobs may not be a problem.”
To emphasize how important it is to improve the lot of job seekers, Moon Jae-in has installed an electronic bulletin board on the wall in his office showing key markers in the labor market. He also established a jobs committee, which he chairs.
The extra budget is to be funded mainly from national tax revenue and will not rely on issuing government bonds, the ministry said.
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