Will the Expanded 'Korean New Deal' with Increased Budget and Jobs Succeed?

Green New Deal and Employment New Deal Budgets Likely to Increase
"Expanded Fiscal Spending Raises Concerns Over Fiscal Soundness"

[Asia Economy Reporter Jang Sehee] The government will announce the 'Korean New Deal Comprehensive Plan' on the 14th as a strategy to overcome the national crisis caused by the novel coronavirus infection (COVID-19). With the addition of new projects, the number of jobs is expected to increase significantly. However, some critics argue that excessive fiscal spending could weaken the market's resilience.

According to related ministries such as the Ministry of Economy and Finance and the Ministry of Employment and Labor on the 11th, the government is expected to invest about 100 trillion won by 2025 to create more than 2 million Korean New Deal jobs. A government official stated, "Future growth engine projects such as electric vehicles and hydrogen vehicles have been added to the Korean New Deal projects," and added, "Through a mid- to long-term job creation plan over five years, we will create 2 million+a Korean New Deal jobs."

With the inclusion of many 'new projects' in the Korean New Deal, the main budget size is also expected to increase. The budgets for the Green New Deal and Employment New Deal are expected to rise significantly. This is due to the addition of projects related to electric vehicles, hydrogen vehicles, and new job creation initiatives. Regarding this, President Moon Jae-in explained, "I personally drew the big picture supporting the two major New Deals, Digital New Deal and Green New Deal, through strengthening employment and social safety nets, and have been closely overseeing the detailed contents of the Korean New Deal until recently."

However, concerns have been raised that the government's job supply may cause side effects due to its lack of sustainability. Professor Kim Soyoung of Seoul National University's Department of Economics pointed out, "When government spending increases, the market reduces spending by at least that amount," adding, "If the government directly provides jobs, the market job capacity may weaken, and the work motivation of other workers may decrease." She continued, "To maximize labor productivity, job creation led by the private sector is important."

Professor Kim Sangbong of Hansung University's Department of Economics also said, "The Green New Deal is very similar in nature to green growth projects," and added, "If 100 trillion won is invested, that means spending about 20 trillion won annually, which inevitably worsens fiscal soundness."

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