4th Round Support Fund 'Selective within Selective'... Also Given to Businesses with Annual Sales Under 800 Million Won and More Than 5 Employees

[Sejong=Asia Economy Reporters Son Seon-hee and Moon Chae-seok] The Democratic Party of Korea and the government have reached a consensus to more precisely differentiate the recipients of the 4th round of disaster relief funds. Given the limited resources and the severe impact on small business owners and self-employed individuals in certain industries due to the prolonged COVID-19 pandemic, the aim is to provide stronger support to self-employed individuals who have suffered actual damage from business restriction measures. This is the so-called "selection within selection." The criteria for sales volume and the number of regular employees, which were the most controversial in the previous three rounds of disaster relief payments, will also be reconsidered.

According to the National Assembly and related government departments on the 15th, the ruling party and government will begin consultations this week to determine the recipients and scale of the 4th disaster relief funds. They plan to relax the existing payment criteria, such as sales volume (annual sales of 400 million KRW or less for general industries) and the number of regular employees (fewer than 5). The ruling party is considering expanding the target to those with annual sales of up to 800 million KRW and also considering proportional payments based on the extent of damage. The number of recipients is expected to increase by about 1 to 2 million compared to the 3rd disaster relief funds distributed earlier this year.

A government official said, "We are reviewing the eligibility criteria," adding, "Since there were many complaints from those excluded in the previous disaster relief payments, we will prepare according to the principle of 'providing robust support without blind spots.'"

◆Large-scale businesses likely to be included in support targets= The most controversial issue during the 3rd disaster relief fund (Support Fund) distribution was the criteria for sales and the number of regular employees. The government provided differentiated support of 1 to 3 million KRW based on conditions of "annual sales of 1 billion KRW or less" for businesses subject to gathering bans and business restrictions, and "annual sales of 400 million KRW or less" for general industries. If annual sales exceeded 400 million KRW (approximately 33 million KRW per month) even slightly, the business was excluded from receiving support, which caused strong dissatisfaction on the ground. The ruling party and government are expected to raise the sales threshold for general industries in line with other sectors.

Additionally, the "fewer than 5 regular employees" limit applied to service industries has been criticized as excessive and is expected to be raised. Previously, support was provided to businesses with fewer than 10 employees in manufacturing, mining, transportation, and construction, and fewer than 5 employees in service industries such as food and lodging. However, since service industries were hit hardest by the COVID-19 crisis, excluding businesses employing 5 or more employees from support was seen as unfair.

The government also excluded large-scale businesses with high sales but operating at a loss from support. Large restaurants and cafes, often located in central areas heavily affected by COVID-19, face high fixed costs such as rent and employee maintenance but have not received adequate government support. The ruling party and government plan to closely review whether additional support will be provided for these cases.

◆Estimated around 20 trillion KRW... Actual payments planned for March= As the ruling party has shifted from "universal and selective simultaneous support" to "priority selective support" for the 4th disaster relief funds, the likelihood of actual support being provided by the end of next month has increased. The ruling party and government have settled on a schedule of "preparing a supplementary budget this month → approval in early next month → payment by the end of next month." It is known that there is strong political will for payments to be made before the April 7 by-elections.

The 3rd round of support, amounting to 9.3 trillion KRW, has been distributed since last month to vulnerable groups such as small business owners and the self-employed. The 4th round is planned to be increased by more than 10 trillion KRW to around 20 trillion KRW. The legislative process for a loss compensation system for self-employed individuals, raised by the political circles, will not proceed immediately. Instead, it will be studied through commissioned research first, and practical measures will be considered later based on the results.

A senior government official said, "The loss compensation system is currently being studied through external research commissioned by the task force (TF) of related ministries," adding, "Once the research results are available, we will have detailed discussions on the loss compensation system."

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