[Full Text] Hong Nam-ki "Possibility of Mass Unemployment Cannot Be Excluded Amid Real Economy Shocks Such as Export Slump and Corporate Earnings Deterioration"

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance. (File photo) [Image source=Yonhap News]

[Asia Economy Reporter Joo Sang-don] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, expressed concern on the 22nd, stating, "It is difficult to rule out the possibility of mass unemployment if the export slump and corporate performance deterioration caused by the approaching global economic recession are compounded by shocks to the real economy."

On this day, Deputy Prime Minister Hong made these remarks while announcing the 'Employment and Corporate Stability Measures to Overcome the Job Crisis' at the Government Seoul Office.

Deputy Prime Minister Hong said, "As seen in the March employment indicators announced last week, unprecedented economic activity contraction has led to a sharp decline in the number of employed persons, and the employment shock is appearing quickly and deeply," adding, "We will prepare and fully respond with two special measures: the COVID-19 crisis response employment stability special measures and corporate stabilization support plans to protect jobs."

The following is the full text of Deputy Prime Minister Hong's announcement.

Dear citizens, we have concluded the fifth emergency economic meeting chaired by the President to overcome the COVID-19 emergency economic situation.

The government has been continuously devising and announcing 'special measures' to overcome the unprecedented difficulties faced by our livelihoods and economy due to COVID-19 and to protect the lives of the people.

At today's fifth emergency economic meeting, we discussed and finalized the 'Operation Plan for the Emergency Economic Central Countermeasures Headquarters' and the 'Employment and Corporate Stability Measures to Overcome the Job Crisis,' and I will now explain the results in order.

First, the 'Operation Plan for the Emergency Economic Central Countermeasures Headquarters.'

Our government has so far achieved exemplary quarantine results globally. Economically, we have been making every effort to minimize damage to domestic demand and employment and to restore livelihoods, prioritizing urgent and preemptive first-stage emergency response measures through five emergency economic meetings held to date.

However, since concerns remain about real shocks such as export declines due to the global economic recession and the possibility of financial market instability recurring, comprehensive government crisis management and response, as well as rapid economic recovery measures, are urgently needed.

From now on, it is necessary to transition to a second-stage response system for continuous crisis management and response.

Accordingly, the government will convert and activate the current crisis management meeting into an Emergency Economic Central Countermeasures Headquarters similar to the COVID-19 Quarantine Central Countermeasures Headquarters to launch full-scale 'economic quarantine.' The Economic Central Headquarters will focus on three roles: ▲analyzing the overall economic situation and risk factors ▲checking and supplementing the implementation status of announced government measures ▲discovering and establishing additional measures to overcome the crisis.

To this end, the Deputy Prime Minister will serve as the head of the headquarters, gathering nationwide capabilities for crisis resolution by involving ministers from 16 economic ministries and related departments, as well as the Bank of Korea and private organizations when necessary.

Under the Central Headquarters, three response teams for financial risk response, industrial and corporate crisis response, and employment crisis response, along with one macro situation monitoring and working support team, will be formed to ensure systematic situation monitoring and response.

Issues and proposals raised at response team meetings will be discussed for follow-up measures at the Central Headquarters and, if necessary, reflected in government policies.

Also, the first vice minister of the Ministry of Economy and Finance will be designated as the spokesperson for the Central Headquarters and will provide detailed explanations of the economic situation and additional measures through regular briefings to the public.

For key measures and important issues with significant economic ripple effects discussed at the Economic Central Headquarters, final decisions will be made at the emergency economic meetings chaired by the President.

Going forward, Central Headquarters meetings will be held regularly once a week on Thursdays, with the first Economic Central Headquarters meeting scheduled for next week.

In particular, during April and May, employment, export, and corporate measures will be promoted, and the Economic Central Headquarters will be intensively operated to ensure the smooth announcement of the second half economic policy direction in early June.

Next, I will explain the 'Employment and Corporate Stability Measures to Overcome the Job Crisis.'

As seen in the March employment indicators announced last week, unprecedented economic activity contraction has led to a sharp decline in the number of employed persons, and the employment shock is appearing quickly and deeply.

With the full-scale global economic recession approaching, it is difficult to rule out the possibility of mass unemployment if real economic shocks such as export slumps and corporate performance deterioration are compounded.

Accordingly, the government will make every effort to protect jobs, the foundation of people's livelihoods, by preparing two special measures: ▲COVID-19 crisis response employment stability special measures and ▲corporate stabilization support plans to protect jobs.

First, the 'Employment Stability Special Measures' worth 10.1 trillion won to quickly absorb the employment shock caused by COVID-19.

The scale of this measure is about 40% of the 2020 job budget (25.5 trillion won), representing a bold investment to support 2.86 million workers, which is 2.5 times the 1.15 million unemployed in 2019.

We have selected tasks focusing on four major areas: ▲support for maintaining employment of small business owners and companies ▲worker livelihood stabilization measures such as the establishment of emergency employment stability subsidies ▲emergency job creation ▲unemployment measures.

Of the total 10.1 trillion won measures, 0.8 trillion won will be immediately implemented using available resources such as contingency funds and fund reallocations, and a substantial supplementary budget will be prepared to secure the remaining 9.3 trillion won, reflecting the required expenses.

The Minister of Employment and Labor will provide detailed explanations of the specific contents.

Next, the corporate stabilization support plan to protect jobs.

Despite efforts to support corporate liquidity and stabilize financial markets, concerns have been raised that if real shocks such as export declines become full-fledged amid ongoing anxiety about corporate bonds and short-term funds and financial difficulties of small business owners and companies, the job base of key industries could be damaged.

Accordingly, the government plans to additionally expand support for corporate stabilization by more than 75 trillion won to protect jobs.

First, for key industries that are the backbone of the national economy and jobs, a 'Key Industry Stabilization Fund for Crisis Overcoming and Employment' worth 40 trillion won will be newly established, and the fund bonds issued will be guaranteed by the state with the consent of the National Assembly.

Through this, we will provide special support not only for liquidity but also for capital expansion on the premise of maintaining employment. To swiftly establish the fund, the government plans to submit the amendment bill to the Korea Development Bank Act to the National Assembly by the 24th and promptly submit the state guarantee consent for fund bonds to the National Assembly after the Cabinet meeting (tentatively on the 28th).

Next, the existing 100 trillion won plus α financial stabilization program will be expanded by an additional 35 trillion won to a total of 135 trillion won plus α.

Through support such as the 'second-stage program' of 10 trillion won for small business funding and 20 trillion won for the Bank of Korea's purchase of corporate bonds, commercial papers, and short-term bonds using liquidity, the financial safety net will be further strengthened to protect companies, the foundation of jobs.

The Chairman of the Financial Services Commission will provide detailed explanations of these measures.

The government will promptly implement follow-up measures for the employment and corporate stability measures confirmed today. Through this, we will make every effort to return our economy to the normal track as soon as possible.

Thank you.

This content was produced with the assistance of AI translation services.