President-elect Yoon's Push for '3 Major Cash Pledges'... Growing Concerns Over 'Welfare Recycling'

16 Trillion Won Newly Required for Cash Pledges Excluding Supplementary Budget
Difficulty Raising Funds by Borrowing Amid Global Interest Rate Hike Trend
Unavoidable to Prevent Patchwork in Welfare Budget

[Asia Economy Yang Nak-gyu, Military Specialist Reporter, Geum Bo-ryeong Reporter, Lee Ki-min Reporter] The Ministry of National Defense’s plan to reallocate military welfare budgets to fulfill the promise of a 2 million won monthly salary for soldiers is a typical case of "taking from the bottom stone to support the top stone." It reflects the decision to cut the predetermined budget in a situation where it is no longer feasible to incur more debt and the already inflated finances must be reduced.

According to the People Power Party on the 25th, about 5.1 trillion won in new budget must be injected to provide soldiers with a 2 million won monthly salary. This is an enormous amount, exceeding 9% of this year’s defense budget. If soldiers’ salaries increase, they could surpass the pay of some professional soldiers such as non-commissioned officers, which would lead to a chain reaction of pay raises for officers and non-commissioned officers.

Professor Kang Sung-jin of Korea University pointed out regarding the plan to raise the average soldier salary to 2 million won, “The idea of securing cash resources by reducing items such as clothing allowances that soldiers previously received is not an additional benefit, so it is a concept that the parties involved would find hard to accept.”

The bigger problem is that welfare budget reshuffling by cutting welfare funds to expand soldier pay could also appear in fulfilling other pledges. During his candidacy, President-elect Yoon announced three major cash pledge plans besides the soldier salary increase: the introduction of parental allowance and the expansion of the basic pension. The parental allowance plan involves paying 1 million won monthly to parents raising children aged 0 to 12 months to ease childcare costs, and the basic pension for seniors aged 65 and over would be raised from the current 300,000 won to 400,000 won. The new funds required for these are estimated at 3.1 trillion won for parental allowance and 8.8 trillion won for the basic pension.

Additionally, the government and the transition team are preparing a supplementary budget to support COVID-19 damage relief. Estimates suggest that the funds available through expenditure restructuring and excess tax revenue will be only in the tens of trillions of won.

Experts point out that considering the macroeconomic environment of fiscal tightening, it is difficult to forcibly fulfill cash welfare pledges. Raising debt amid interest rate hikes could increase interest burdens, and if similar budget items are cut to secure funds, the perceived welfare benefits will inevitably decline. Professor Kang said about President-elect Yoon’s various cash welfare pledges, “It is right to immediately support small business owners affected by COVID-19, but for other cash welfare, the amounts should be reduced or the timing delayed,” adding, “Monetary expansion is no longer possible due to inflation issues.”

However, the transition team maintains a stance of not giving up. On the 20th, Choi Ji-hyun, senior deputy spokesperson of the transition team, said, “The 2 million won soldier salary is a major pledge,” and “We are reviewing various ways to implement it.” He added, “The Foreign Affairs and Security Committee and the Planning and Coordination Committee are jointly reviewing the specific form and how to secure the budget.”

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