3.9 trillion won extra budget set for youth jobs
The government unveiled a 3.9 trillion won ($3.7 billion) supplementary budget to reduce youth unemployment and support regions facing difficulties due to corporate restructuring.
“One out of four young people are virtually jobless. If we don’t take action for the 390,000 of the ‘echo-boomer’ generation who will enter the job market by 2021, the job problem will turn catastrophic,” finance minister Kim Dong-yeon said. The echo-boomer generation refers to the children of the country’s second ‘baby-boomers.’ Born between 1991 and 1996, they have started entering the job market and worsening the youth unemployment rate which stood at 9.8 percent last year.
The government plans to pour 2.9 trillion won into the extra budget to create 50,000 jobs for the young people. The country has set a supplementary budget for four consecutive years since 2015.
It includes increasing annual real income of young workers at smalland medium- sized enterprises (SMEs) by 10 million won through diverse subsidies. If an SME hires a young regular worker, it will get a 9 million won subsidy. The government allocated 1.7 trillion won for these support programs.
It also focuses on encouraging young people to start their own businesses. The government will pour in 800 billion won as a subsidy on top of tax benefit programs, under a plan to nurture 120,000 startups annually.
The government allocated a 1 trillion won extra budget to South Gyeongsang Province, North Jeolla Province and Ulsan, which are suffering due to restructuring in the shipbuilding and automobile industries.
“The jobless rate more than doubled in these regions amid accelerating corporate restructuring. There could be additional crises in production and jobs,” the minister explained. The 1 trillion won includes subsidies for businesses maintaining jobs and training programs for the unemployed. SMEs that have been supplying goods to the shipbuilders and automobile companies will also get 400 billion won in subsidies.
Through the extra budget as well as tax benefits, the government aims at creating up to 220,000 additional jobs by 2021, lowering the youth unemployment rate to below 8 percent.
Analysts agree that the supplementary budget won’t have a notable impact on economic growth, though it may temporarily help sustain the job market.
“It is a temporary remedy. However, it is meaningful since it eases youth unemployment and supports the income and consumption of young people amid growing external uncertainties,” said Oh Jae-young, an economist at KB Investment and Securities.
The government expects the supplementary budget to pull up the economic growth rate by 0.1 percentage point by increasing household income.
The supplementary budget will be executed in May, following approval by the National Assembly. It will be funded without issuing government bonds, but it remains to be seen if it will go into effect as the opposition parties are not supportive of the extra budget plan.