Korean government announces ‘Korean New Deal 2.0’
THE government announced the upgrade of Korean New Deal, Korean New Deal 2.0 on July 14, one year after the introduction of the original plan. The Korean New Deal, through investment and regulatory improvement, has accelerated remote work and education, promoted low carbon and eco friendly manufacturing, and led the transformation into a green and digital economy. The national strategy has received attention from the global community as appropriate policies to respond to the pandemic and climate change.
There have been many changes internally and externally since the introduction of the strategy. At home people have yet to get out of the impact of the disease. Among the concerns brought up include education being affected; income gaps among households are widening, affecting the quality of childcare and living standards; concerns are rising among young adults about jobs, income and housing ; and demand for labor is rising in new industries, such as SW, as transition to a digital and green economy is speeding up, which requires systematic support for business restructuring, as well as large-scale labor mobility that follows.
Externally, Korea is faced with the carbon neutrality issue and the government will use this challenge as an opportunity to develop green growth engines.
The Korean New Deal 2.0 hopes to develop the original job and social security programs to Human New Deal, reinforced with increased investment in human resources development, including programs to help bridge the gap. Aside from that, to upgrade digital and green New Deal by adding new programs and expanding original ones, increase fiscal investment planned to be made by 2025 from 160 trillion won to 220 trillion won, and bring a total of 600,000 extra jobs expected to be created, in addition to 1.9 million jobs projected to be made through the original plan.
Digital and green New Deal
The government upgraded digital New Deal to promote new businesses, as well as accelerate the application of the project outcomes for Korean citizens to feel the benefits as soon as possible.
With that, it aims to build an open metaverse platform and promote services based on ICT convergence, promote the development of core technologies, including cloud computing and blockchains, and work on the application of digital New Deal outcomes for every Korean to be able to feel the benefits in everyday life.
The government has also expanded green New Deal taking into consideration carbon neutrality by adding a new category of carbon neutrality, under which investment will be made in projects to achieve the 2030 NDC3, such as building an emissions measurement system and creating a carbon reduction program for industries, as well as expand green New Deal to cover various projects, as a result to effectively support the transition to a low-carbon economy.
Human and local New Deal
Human New Deal is an upgrade of Korean New Deal’s job and social security programs. The government has expanded the original plan to pursue inclusive growth via increased investment in human resources and supports to help bridge the gap.
It hopes to increase investment in human resources development for such areas as digital and green industries, SW and BIG35; help young adults get out of the impacts of the pandemic by providing upgraded support which will cover from education and employment to housing and asset building; upgrade education and childcare support for low income households to help narrow the gap and prepare them for a rapid transformation of the economy; adopt a comprehensive education package of which the main focus is on the acquisition of essential academic skills to help make up for the learning loss caused by the pandemic; and also upgrade the country’s caregiving system from child and senior care to disability assistance and singleparent support.
On the other hand, existing local New Deal projects will be accelerated with the upgraded initiative, and promising local projects will also receive support. This will then help find local government projects with a bright future and provide fiscal and administrative incentives to accelerate their launches.
Regulatory reform and future plans
The government will improve regulations to support business restructuring and prepare for changes in labor demand that ensues. And as to attract private sector investment, the government will continue to promote investment in the Korean New Deal projects by the private sector. Following the Korean New Deal funds launched in March and sold out in a week, a total of 100 billion won of funds will be made available in the market.
In the future, the government plans to include in the 2022 budget proposal over 30 trillion won worth of budgets for the New Deal 2.0 and work to make into law the existing Korean New Deal bills.
The government will also be working on the rapid launch of Korean New Deal 2.0 projects and announce this July action plans for the comprehensive education package and young adult support package.
Finally, the Korean government wants to draw up details to support business restructuring and labor market reformation, which are aimed at promoting the transition to a digital and carbon neutral economy, and draw up measures to encourage small enterprises to start new businesses and retry after failure.