Ministry of Economy and Finance Removes 'Unemployed' from Job Budget Guidelines... Budget Cuts for Subsidy Fraud

Job Budget Targets Unemployed → Job Seekers & Vulnerable Groups
Remove 'Most Wages Supported' Phrase for Direct Jobs
Subsidy Fraud Budget Cut Regardless of Measures
New Disaster Safety Project Budget, Added 'Hydrogen' to Environmental Budget

The Ministry of Economy and Finance has made significant changes to the guidelines for fiscal support job budgets. The term ‘unemployed’ has been removed and replaced with expressions such as ‘job seekers’ or ‘employment-vulnerable groups.’ Direct job projects have been defined as temporary projects aimed at increasing employability. Private subsidies will face budget cuts even if irregularities are detected, and gender-responsive budgeting and international event budgets will be subject to more meticulous fiscal execution.

On the 7th, Asia Economy analyzed the Ministry of Economy and Finance’s detailed guidelines for drafting the 2024 budget and identified these changes. Typically, the Ministry publicly releases ‘drafting guidelines’ that outline the direction of the next year’s budget and internally distributes ‘detailed drafting guidelines’ to organize the budget. Each government ministry prepares and submits its budget according to these detailed guidelines, so when the guidelines change, budgets must be adjusted accordingly.

Regarding job budgets, the concept of fiscal support jobs and the types of beneficiaries have been changed. This year’s guidelines described the purpose of direct jobs as ‘employment of unemployed persons in the public sector and private companies.’ However, next year’s guidelines change this to ‘temporary, transitional, and work-experience jobs.’ The phrase ‘most of the wages are supported by the government’ has also been removed. This clarifies that the project is not simply about the government continuously subsidizing wages to increase jobs but is a temporary project aimed at enhancing employability.

Budget projects that were indiscriminately provided to the unemployed are also expected to be reduced. The Ministry changed the description of unemployment income maintenance/support from ‘projects that compensate wages of the unemployed’ to ‘projects that provide support to those who have the ability to work but cannot find suitable jobs.’ For vocational training, the term ‘unemployed’ was removed from the target group and replaced with ‘increasing the employability of job seekers.’ Employment services and employment incentives also now define beneficiaries as ‘employment-vulnerable groups.’ While last year the scope was broad, including employers (companies) and job seekers (individuals), going forward, the budget will focus on socially disadvantaged groups.

New project types have also been added. Previously, fiscal support job projects were classified into six categories for budget execution, but from next year, ‘supported employment and rehabilitation’ will be added. The goal is to promote labor market integration for people with disabilities or those temporarily unable to work due to accidents or illnesses. Since this is organized as a separate project, related budgets are expected to increase despite the sound fiscal policy stance.

Budget Cuts Even If Promises Made to Prevent Recurrence of Private Subsidy Fraud

Regulations on private subsidy projects have been strengthened regarding fraudulent claims. Until now, the Ministry of Economy and Finance has guided that budgets should be cut if fraud is detected and countermeasures are insufficient. Next year’s budget guidelines stipulate that budgets will be cut regardless of countermeasures once fraud occurs, and results from the Office for Government Policy Coordination’s inspections must also be considered. To ensure more thorough inspections, when preparing budget request materials, the actual execution amount of subsidy projects must be calculated and reported, and institutional improvement plans to prevent fraudulent or improper use of national subsidies must also be prepared.

The gender-responsive budgeting guidelines, which had been criticized for being vague, have been clarified. Previously, each ministry defined gender-responsive budgeting as ‘projects that directly or indirectly contribute to the ministry’s gender equality goals,’ leading to many complaints about which policies should be included. In response, the guidelines now explicitly specify projects reflecting the 3rd Basic Plan for Gender Equality Policy, gender impact assessment results in the gender-responsive budget, and gender equality-focused projects.

Measures for sound fiscal management have also been implemented. A representative change is the budget criteria for international events. Government ministries hosting international events with a total project cost exceeding 5 billion KRW were required to undergo feasibility studies. From next year’s budget, if national treasury support exceeds 2 billion KRW, a ‘policy rating investigation’ must be conducted. If there is a plan to hold an international event, an application form agreeing to undergo the investigation must also be submitted. A Ministry of Economy and Finance official explained, “This reflects amendments to laws and regulations and aims to use the budget more meticulously.”

Disaster safety project budgets have been newly organized in next year’s guidelines. These projects, determined by the Minister of the Interior and Safety in consultation with the Minister of Economy and Finance under the Framework Act on the Management of Disasters and Safety, will be compiled by each ministry, the Ministry of the Interior and Safety, and the Central Safety Management Committee and then notified to the Ministry of Economy and Finance.

Greenhouse gas reduction-responsive budgets have been reclassified to reflect new policies. The Ministry classifies reduction project budgets into 10 categories aligned with the national carbon neutrality policy, eliminating public, market utilization, and awareness-raising/policy support categories. Instead, hydrogen, carbon sinks, and international reduction have been newly added, and related budgets are expected to increase.

Regarding informatization budgets, the Ministry announced it will prioritize allocating resources to projects that eliminate departmental silos, achieve AI and big data outcomes, or implement the government’s core national agenda of digital platform government through digital and intelligent transformation.

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