Seoul's 'Disaster Emergency Living Expenses' Boost Beneficiary Household Consumption by 12%... 8 out of 10 Say It Helps Household and Local Economy

Greater Consumption Boost in Low-Income Groups... Under 2 Million Won per Month Up 19.8%
88% of Supported Citizens Say "Helpful for Household," 87% Say "Contributes to Local Economy"
Disaster Crisis Groups ▲Single-Person Households ▲Self-Employed & Freelancers ▲Middle-Aged ▲Low-Education Groups

[Asia Economy Reporter Lim Cheol-young] Last year, Seoul City's COVID-19 emergency disaster relief payments resulted in over a 10% increase in consumption stimulation, with nearly a 20% increase in consumption observed among the lower-income group earning less than 2 million KRW per month. Notably, more than 8 out of 10 people evaluated that Seoul City's emergency disaster relief payments contributed positively to household finances and the local economy.

On the 3rd, the Seoul Welfare Foundation announced the results of a study on the 'Seoul City Emergency Disaster Relief Payments,' which distributed 540 billion KRW to 1.6 million households from April to May last year. Of the relief payments provided by Seoul City, 99.7% was spent, and 50.8% to 76.3% of the increased income led to additional consumption.

Above all, the overall consumption improvement effect was significant. According to the study, from April 18 to May 12 last year, when Seoul City’s emergency disaster relief payments were spent, the consumption improvement effect was about 12%. During the period from May 13 to July 4, when national disaster relief funds were also spent concurrently, a 19.6% consumption stimulation effect was observed. For citizens earning less than 2 million KRW per month during the period when only the emergency disaster relief payments were provided, consumption increased by 19.8%, showing an even greater consumption stimulation effect.

The Welfare Foundation analyzed, "Although consumption increased among the higher-income groups within the beneficiary population, it was not statistically significant," adding, "This means that the emergency disaster relief payments increased consumption in the beneficiary group compared to before the payments, and the increase was more pronounced among the lower-income groups within the beneficiaries."

The effect on increasing sales for self-employed businesses was also substantial. When emergency disaster relief spending increased by 10%, franchise store sales rose by 0.36%, and for franchises with annual sales under 300 million KRW, sales increased by 0.65%, indicating that the emergency disaster relief payments provided greater support to small-scale self-employed business owners.

With improvements in household consumption and increased sales for self-employed individuals, public evaluation was very positive. A survey conducted by the Welfare Foundation from October 20 to November 20 last year among 7,221 citizens who received the emergency disaster relief payments showed that 88.1% responded that it helped their households (71.1% positive, 17.0% very positive). Additionally, 86.8% (67.2% positive, 19.6% very positive) said it had a good effect on revitalizing the local economy through consumption stimulation.

The Welfare Foundation explained, "Most of Seoul City’s emergency disaster relief payments were directly spent on supermarkets, daily necessities, and lifestyle services, helping low-income households struggling with income reductions in their daily lives."

Among the groups receiving emergency disaster relief payments, those with lower educational attainment (middle school or below), aged 35-49, single-person households and single-parent families, as well as self-employed and freelancers, were significantly affected by the negative impacts of COVID-19.

Meanwhile, among applicants for emergency disaster relief payments, an estimated 168,000 households were classified as ‘disaster crisis households’?those in income poverty (below 30% of the median income), with unstable income and low asset levels. Of these disaster crisis households, 60.1% were single-person households, and 39.3% of household heads were freelancers or other special-type workers. Middle-aged groups were more vulnerable to disaster situations than youth and elderly, with 32% of disaster crisis household heads aged 35-49 and 37.2% aged 50-64.

Kim Seon-soon, Director of Welfare Policy, said, "It was a relief that low-income households struggling with livelihood difficulties due to COVID-19 were able to make essential purchases through last year’s emergency disaster relief payments," adding, "Seoul City is analyzing the characteristics of disaster crisis households identified through such research, conducting discovery and support projects for these households, and will continue to do its utmost to discover and support crisis households more thoroughly in the future."

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