"Additional 100,000 Won Needed for Special Employment Mask Support"...Supplementary Budget Increases but Fiscal Rules Remain Unchanged

"Special workers, 100,000 won more"... Supplementary budget size grows but debt management remains stagnant
Ruling party orders "increase for mask purchases, etc."
Farmers also included as support targets... Support of 1 million to 3 million won discussed

[Asia Economy Reporters Kim Hyun-jung (Sejong), Jang Se-hee] Following support for farmers affected by COVID-19, demands to increase support for special-type workers (teukgohyeong geunrosangsa, teukgo) with poor working conditions have been raised mainly by the Democratic Party of Korea. Since President Moon Jae-in mentioned support for farmers the day before, the size of this year's first supplementary budget (chugyeong) which was around 19.5 trillion won is likely to increase further. The ruling party believes that since the damage to some industries due to the prolonged COVID-19 pandemic has grown, related support projects should be added in a tailored manner to expand the support amount to over 20 trillion won. Although the supplementary budget size is likely to increase compared to the original government proposal, the 'fiscal rules' to manage fiscal soundness remain dormant in the National Assembly. Without control mechanisms, the financial burden from increased spending is expected to worsen.

◆ "Special workers essential laborers 100,000 won more" Ruling party orders increase = According to the National Assembly on the 11th, the Democratic Party is advocating for an additional payment of 100,000 won to special workers engaged in essential labor such as health and medical fields under the name of mask purchase expenses. A Democratic Party official said, "While the amount for small business owners was increased compared to previous support, it was judged that support for special workers was insufficient," adding, "We are considering a plan to provide an additional 100,000 won to essential workers among special workers exposed to COVID-19 infection risks, such as those in health and medical fields, delivery workers, and sanitation workers."

The specific support amount is currently under discussion, but if based on the government's initial announcement covering all 800,000 special workers and freelancers, the increase could amount to about 80 billion won. Prior to this, the ruling party and government announced that as part of employment stability support for vulnerable workers, 700,000 special workers and freelancers who had previously received support would be given 500,000 won, and 100,000 new recipients would receive 1 million won.

Support for farmers, including flower farmers, was also added during the ruling party's discussions. This considered the sales impact on related industries due to the cancellation of annual events with high flower consumption such as entrance and graduation ceremonies caused by the spread of COVID-19 and the impossibility of group gatherings. President Moon also accepted the ruling party's proposal and stated at a meeting with the Democratic Party floor leaders on the 10th, "If there is consensus between the ruling and opposition parties, I will instruct the government to accept adding farmers."

However, since it is judged that there was no direct damage to business operations due to social distancing measures, the support amount is unlikely to reach the level of small business owners (up to 5 million won). Currently, support amounts ranging from 1 million to 3 million won are being discussed within the party. Regarding this, the government has stated it will observe the National Assembly's discussion process. A government official said, "(Increasing the supplementary budget size including farmer support) requires in-depth discussion during the National Assembly process."

Fiscal rules amendment stalled in the National Assembly
No public hearings for public opinion gathering
Ministry of Economy and Finance focuses on May fiscal strategy meeting

◆ Supplementary budget amount increases... Fiscal rules stalled in the National Assembly = While the size of the 4th disaster relief fund is increasing due to the addition of new support projects during standing committee discussions, the fiscal rules for minimum debt management are stalled in the National Assembly.

The government submitted a bill to the National Assembly last November to amend the National Finance Act to manage the national debt ratio relative to GDP at 60% and the integrated fiscal balance deficit ratio (total revenue - total expenditure) within 3%, but discussions have made virtually no progress. So far, the National Assembly has not held a single public hearing to gather opinions from experts and others. In contrast, a public hearing related to the Basic Act on Service Industry Development, which the ruling party strongly pushed, was held on the 25th of last month, and a public hearing on improving the preliminary feasibility study system is scheduled for the 17th.

Neither the ruling nor opposition parties show strong will to discuss. The ruling party emphasizes that it is not the time for discussion, while the opposition stresses the need for stricter standards. It is judged that the interests involved are relatively simple and the urgency is low compared to other bills. Democratic Party lawmaker Ko Yong-jin, a member of the National Assembly's Planning and Finance Committee, said, "It is not a situation where we can actively talk about fiscal rules," adding, "Currently, it is important to overcome the COVID-19 disaster phase." Ryu Seong-geol, the People Power Party's secretary of the Planning and Finance Committee, emphasized, "Both ruling and opposition parties oppose the government's fiscal rules proposal," and added, "When the economy is difficult, tax revenue decreases and national bond issuance increases, so stricter principles and standards are needed for fiscal management."

If discussions in the National Assembly fail this month, the opportunity to bring fiscal rules back to the surface will be the National Fiscal Strategy Meeting scheduled for May. Since the submitted bill cannot be amended, the Ministry of Economy and Finance plans to mention the necessity of the rules at the National Fiscal Strategy Meeting and push for later passage in the National Assembly. A Ministry of Economy and Finance official explained, "We plan to persuade by examining the medium-term fiscal outlook and the social changes the rules will bring to fiscal policy."

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