Jeong Sye-gyun and Hong Nam-gi Emphasize 'One Team'... Will Financial Support for the Loss Compensation System Accelerate?

Jeong Sye-gyun, Hong Nam-ki, and Yoo Eun-hye Attend This Year's First 'Prime Minister-Deputy Prime Minister Council'

Prime Minister Chung Sye-kyun (right) is attending the Prime Minister-Deputy Prime Minister meeting held at the Government Complex Sejong in Sejong City on the morning of the 26th, conversing with Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki (left) and Deputy Prime Minister and Minister of Education Yoo Eun-hye (center). [Image source=Yonhap News]

[Sejong=Asia Economy reporters Son Seon-hee and Kim Hyun-jung] Prime Minister Chung Sye-kyun called Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki to discuss the ‘loss compensation system,’ which has caused financial friction, and requested cooperation with the National Assembly. This meeting was staged to reconcile conflicts after President Moon Jae-in’s directive to "consider institutionalizing loss compensation within a certain range that the budget can bear."

Deputy Prime Minister Hong had also missed the high-level party-government-civil meeting on the 24th due to health issues, and attention is focused on whether this meeting will accelerate the promotion of the loss compensation system. Unlike previous COVID-19 response measures, Prime Minister Chung plans to gather public and academic opinions through social dialogue and public discussion processes to present a form of ‘co-governance.’

On the morning of the 26th, before the Cabinet meeting, Prime Minister Chung held a ‘Prime Minister-Deputy Prime Minister Council’ for about 30 minutes at his office in the Government Complex Sejong with Deputy Prime Minister Hong and Deputy Prime Minister for Social Affairs and Minister of Education Yoo Eun-hye. Regarding the ‘legalization of loss compensation,’ Prime Minister Chung said, "Please prepare carefully by reviewing it within the scope that the national budget can bear and through sufficient consultation among related ministries, paying close attention to the opinions from the field that is experiencing difficulties." This is interpreted as an active call for cooperation with the assumption of ‘passing the February extraordinary session of the National Assembly.’

This council was the first to be held this year and the seventh since Prime Minister Chung took office. It was the first external meeting since Deputy Prime Minister Hong’s absence from the high-level party-government-civil consultation last weekend, which exposed differences over the loss compensation system. Since the first public Deputy Prime Minister Council held after his inauguration in January last year, all subsequent meetings (five times) were held as private informal talks.

The Secretariat for Government Policy Coordination unusually disclosed the schedule of this council to quickly quell rumors of party-government conflicts surrounding the loss compensation system and to show willingness to cooperate for legislative promotion. The Secretariat made the meeting public and, unusually, provided a press release. A government official from the Prime Minister’s Office explained the purpose of the meeting, saying, "Since President Moon also mentioned the legalization of loss compensation, the stage of discussing ‘whether or not to do it’ has passed. It means that we will coordinate well in the future regarding the actual required budget and scope to ensure effectiveness."

In the press release, the Secretariat stated, "Prime Minister Chung and the two Deputy Prime Ministers agreed that for the fifth year of the Moon Jae-in administration, it is important for the Cabinet to work as one team to produce government achievements that the public can feel," and "they decided to hold the ‘Prime Minister-Deputy Prime Minister Council’ frequently to further strengthen the Cabinet’s cohesion."

The ruling party is burning with legislative will for the loss compensation system with a specific deadline of ‘passing the February extraordinary session,’ but future discussions are expected to be difficult due to concerns about realistic fiscal burdens as well as fairness controversies. In addition to self-employed and small business owners, who are currently the main targets for compensation, there are many cases where special employment workers (teukgo) and freelancers have suffered serious economic damage due to social distancing measures.

However, fairness controversies arise because it is not easy for them to clearly prove ‘sales’ like general self-employed people. There are also ongoing concerns that the vulnerable low-income groups who have not even entered the institutional economic activity area where sales and income are reported may fall into legal blind spots during the legalization process.

Above all, the biggest problem is the fiscal burden. Considering that Korea has a particularly high proportion of self-employed compared to advanced countries overseas, it is estimated that the legalization of loss compensation this time will require at least several trillion won and possibly more than 100 trillion won. This is why the fiscal authorities cannot help but express ‘realistic impossibility.’

Considering these points, the party and government plan to proceed with public discussion procedures, including reflecting opinions from private experts. On the 28th, at the Thursday Dialogue, Prime Minister Chung will invite government officials such as Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, and Kang Sung-chun, Vice Minister (acting Minister) of the Ministry of SMEs and Startups, who will oversee the loss compensation system, as well as academic figures like Professor Lee Woo-jin of Korea University’s Department of Economics, Professor Woo Seok-jin of Myongji University’s Department of Economics, and representatives from the Federation of Small and Medium Business and the Korea Foodservice Industry Association to listen to comprehensive opinions. National Assembly Planning and Finance Committee Chairman Yoon Hu-duk (Democratic Party member) will also attend this meeting.

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