Deputy Prime Minister and Finance Minister Kim Dong-yeon said Monday that the government will increase next year’s social overhead capital budget by 50 percent, dedicating all efforts to creating jobs in local economies and for the middle-aged population.
The top fiscal policymaker’s reiteration of expansive fiscal spending and job creation was taken as a signal that he would adjust his policy tone to be in line with that of Cheong Wa Dae, especially with presidential chief of staff for policy Jang Ha-sung.
“(The government) will invest some 12 trillion won ($10.8 billion) next year into social overhead capital that is closely related to people’s livelihoods,” Kim said in a meeting with economy-related ministers at the Export-Import Bank of Korea.
“Next year’s budget, including this (SOC) investment, will primarily focus on job (creation).”
Deputy Prime Minister and Finance Minister Kim Dong-yeon speaks in a meeting with economy-related ministers at the Export-Import Bank of Korea. (Ministry of Economy and Finance)
Conventional SOC mostly refers to heavy infrastructure such as highways and ports, while SOC related to people’s livelihoods refers to facilities such as libraries and sports centers, as well as industrial complexes that are directly related to revitalization of the local economy, according to the Ministry of Economy and Finance.
The central government’s SOC development budget for next year is currently estimated at some 8.7 trillion won, up 50 percent from this year’s total of 5.8 trillion won. Combined with local governments’ injection, the nation’s total SOC budget will tally at around 12 trillion won, according to Kim.
The government’s budget bill, including the expansive fiscal spending for jobs, is to be confirmed at the Cabinet meeting Tuesday and submitted to the National Assembly on Friday for final review and approval.
“Our economy has been advancing at a potential growth pace, but the people’s actual quality of life has made little progress,” Minister Kim said, pointing out the drop in regional jobs.
“The core task is to create quality jobs in regions (other than Seoul and metropolitan cities) and to establish daily infrastructure and industrial complexes, so that young people won’t have to leave (for jobs),” Kim said.
The finance minister’s policy blueprint was backed by Employment and Labor Minister Kim Young-joo and Land, Infrastructure and Transport Minister Kim Hyun-mee.
“A large part of the (country’s) unemployment is because those in their 40s and 50s find it difficult to find a position after early retirement,” said Labor Minister Kim, pledging government support for the age cluster.
Land Minister Kim announced a plan to revitalize government-led “innovative cities,” offering deregulation and other incentives for companies to operate there. The initial target is to increase the number of businesses operating in innovative cities to 1,000 and the number of employees to 20,000 by 2022, according to Kim.
“The relocation of public organizations (to the 10 innovative cities across the country) has had some effect in boosting regional economies, but the number of companies and universities yet remain limited,” she said.
The government will announce a comprehensive development plan for innovative cities by October this year, seeking to alleviate construction regulations and licensing requirements for companies.
The deputy prime minister‘s plan to revitalize the regional economy and to restructure the nation‘s economic system was taken as a collaborative gesture towards the Blue House’s top policymaker.
On the previous day, Jang had reaffirmed his commitment to President Moon Jae-in’s income-led growth initiative, dismissing the mounting criticism on latest job market statistics.
“The recent employment and household income data does not lead me to give up the income-led growth policy, but rather underline the need to speed up the economic initiative,” Jang said in a meeting with reporters.
The top presidential aide and the finance minister have been under fire for allegedly feuding over the economic policy direction. It was Kim who repeatedly expressed concerns over what he saw as drastic actions, including the latest pace of the legal minimum wage hike.
“(Jang’s press briefing) was significant as it offered a comprehensive perspective on the misunderstanding concerning income-led growth,” Minister Kim said, in response to reporters’ questions.
However, the minister also reserved his stance over the incumbent administration‘s policy direction, pointing out to the burden on the job market.
“There may be various interpretations on the effect of income-led growth policies,” Kim said in a parliamentary committee meeting, following the ministerial meeting.
“(The government’s approach) may have some positive effects for self-operating businesses and wage earners, but it may also include negative consequences when it comes to employment in general.”
By Bae Hyun-jung (firstname.lastname@example.org)