South Korea will increase spending on social welfare in a bid to tackle key challenges such as its low birth rate, greying population and record-high youth unemployment.
One-third of its Budget for next year announced on Tuesday, or 130 trillion won (S$158 billion), is devoted to spending on welfare, health and labour policies, according to the Finance Ministry.
Job creation for young people is a priority, said Finance Minister Yoo Il Ho. About 17.5 trillion won - a 10.7 per cent increase from the current budget - will be set aside for this purpose, such as for the gaming and virtual reality industries.
This is in addition to the Labour Ministry's 7.4 billion won plan to offer financial aid to help mitigate the hardships faced by young unemployed people.
Their unemployment, which hit a record high of 12.5 per cent in February this year, has been a major source of concern in South Korea as the economy slows down.
Official figures show that 560,000 young people aged 15 to 29 were jobless as of March.
The government has stepped up efforts to encourage companies to open up more job opportunities for young people, as well as to offer more training and support services to fresh graduates.
The Labour Ministry is set to launch later this month a financial assistance scheme that will benefit some 24,000 job seekers under the age of 34, as part of a broader package to tackle youth unemployment.
The new scheme, which is similar to welfare programmes for young job seekers in Australia and Britain, will offer up to 600,000 won over three months to job seekers to help them cover job-hunting-related expenses such as renting suits for job interviews.
Job seekers spend an average of 440,000 won a month preparing for job interviews, according to a June poll of 334 people by job-search site Saramin. The money is spent on grooming and attending courses to boost employability, such as IT skills.
The beneficiaries will be chosen by counsellors at job centres and they will have to undergo career counselling and job training as well, said the Labour Ministry. It added that the details are being worked out and will be announced later.
The ministry also emphasised that its programme is different from one rolled out early last month by the Seoul municipal government but which was later put on hold by the central government. Seoul's scheme offered cash subsidies of 500,000 won a month to some 3,000 unemployed youths from low-income families.
"Seoul city's plan does not include job-seeking efforts as a prerequisite (for application)... it is likely that recipients will just rely on the cash assistance instead of actively seeking work," Labour Minister Lee Ki Kwon said when announcing the ministry's scheme.
Seoul city had set aside 9 billion won to provide cash handouts for up to six months to unemployed people aged between 19 and 29 who have lived in the capital for at least a year. The first payout was given to 2,831 recipients on Aug 3.
But the Welfare Ministry suspended the scheme a day later, claiming that it was launched without approval. It ordered Seoul to recover the disbursed sums. Seoul has filed a petition with the Supreme Court to overrule the ministry's order.
Critics and newspaper editorials have warned that cash handouts for the unemployed would lead the country down the slippery slope of welfare dependency and erode moral values. But the financial aid is welcomed by those who need it most.
Ms Park Eun, 30, who feels bad about relying on her parents for her living allowance while mugging for a civil service exam in the past five years, said: "If distributed fairly, the subsidy can go a long way in helping those in need."
