50,000 Places Shut Down at Step 3... Possibility of First Supplementary Budget Next Year

Review of 3rd Disaster Relief Fund in January Next Year
Budget of 3 Trillion Won + α Far from Enough

On the 3rd, as the metropolitan area's quarantine measures are being strengthened to curb the spread of the 'third wave' of the novel coronavirus infection, Namdaemun Market in Jung-gu, Seoul, is showing a quiet scene. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporters Joo Sang-don and Jang Se-hee] As the daily number of confirmed cases of the novel coronavirus infection (COVID-19) exceeds 1,000, the possibility of raising the "social distancing" to level 3 is increasing. If level 3 becomes a reality, more than 500,000 multi-use facilities nationwide, including wedding halls, movie theaters, and PC rooms, will be forced to close, causing enormous social and economic damage to snowball. The government’s budget secured for COVID-19 damage support next year (3 trillion won + α) may become grossly insufficient. As the government is expected to advance the timing of the 3rd disaster relief fund payment to January next year, the scale of the "plus alpha" could be significantly expanded. In addition, there are also forecasts that the first supplementary budget for 2021, that is, the 5th supplementary budget for COVID-19 response, will be inevitable.

On the 14th, a government official said, "The government’s mention of '3 trillion + α' as the scale of the 3rd disaster relief fund means that the payment amount may vary depending on the extent of the damage," adding, "We are reviewing the degree of damage including small business owners and self-employed people."

The ruling party and the government are first considering a plan to pay the 3rd disaster relief fund in January. Initially, they planned to pay it before the Lunar New Year holiday in February, but after the budget was finalized by the National Assembly on the 2nd, social distancing was raised to level 2.5 in the metropolitan area and level 2 in non-metropolitan areas, increasing the damage and prompting the need for a faster response.

Since the social distancing level of 2.5 or 3 was not anticipated when the budget was finalized, there are considerable claims to increase the scale of the 3rd disaster relief fund payment, but realistically, it is not easy. The scale is set at 3 trillion won + α in next year’s budget, so there is a limit to significantly increasing it in a short period.

Currently, only self-employed and small business owners are included in the 3rd support fund payment target, but there is room to expand to vulnerable employment groups or low-income groups in the future. Previously, when the 4th supplementary budget was prepared, the government allocated budgets including 3.8 trillion won for emergency damage support for small and medium enterprises, 2.2 trillion won for an emergency care support package, 1.4 trillion won for an emergency employment stabilization package, and 400 billion won for an emergency livelihood support package for low-income groups.

If raised to level 3, the possibility of preparing the first supplementary budget for COVID-19 response next year is also raised. Although the order changes as it moves into next year, it is virtually the fifth consecutive supplementary budget prepared to overcome COVID-19. The cases where supplementary budgets exceeded four times were only twice, in 1961 (4 times) and 1950 (7 times).

Level 3 is implemented when the situation is judged to be a nationwide pandemic, and if patients increase rapidly nationwide, the medical system faces the risk of collapse. Level 3 social distancing is the strongest policy the government can implement. At level 3, gatherings and events of 10 or more people are prohibited, and all multi-use facilities except essential facilities such as medical institutions must close. While 130,000 facilities suspended operations at level 2.5, the number will increase sharply to more than 500,000 at level 3.

Shin Se-don, honorary professor of economics at Sookmyung Women’s University, said, "Although the COVID-19 response budget in next year’s budget is grossly insufficient, neither the government nor the ruling party can immediately bring up supplementary budget talks as the ink on the budget bill is not yet dry," adding, "However, supplementary budgets are ultimately inevitable, so there is a high possibility that the supplementary budget card will be pulled out ahead of the April by-elections next year."

Meanwhile, to respond to COVID-19 this year, the government prepared the 1st (11.7 trillion won), 2nd (12.2 trillion won), 3rd (35.1 trillion won), and 4th (7.8 trillion won) supplementary budgets.

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