S. Korea unveils $13.8b stimulus package to boost jobs, welfare

A job fair in Incheon, South Korea, last month. Unemployment among under-30s hit 11.2 per cent in April, more than double the rate for the entire working population. Under new proposals, Seoul will spend 4.2 trillion won (S$5 billion) to help create
A job fair in Incheon, South Korea, last month. Unemployment among under-30s hit 11.2 per cent in April, more than double the rate for the entire working population. Under new proposals, Seoul will spend 4.2 trillion won (S$5 billion) to help create 110,000 jobs.PHOTO: BLOOMBERG

SEOUL • South Korea launched a US$10 billion (S$13.8 billion) stimulus package to create jobs and bolster welfare programmes in the country faced with slow growth and an ageing population.

The 11.2 trillion-won (S$13.8 billion) plan is the first since Mr Moon Jae In was elected President of Asia's fourth-largest economy last month and the finance ministry said it will be mostly funded by tax revenue rather than the issuance of state bonds.

Under the proposals, Seoul will spend 4.2 trillion won to help create 110,000 jobs - including 71,000 in the public sector - while 7 trillion won will be set aside for welfare for the elderly, working mothers and low-income households.

Among the new jobs being targeted are firefighters, police officers, assistant teachers and social workers, while young job seekers, small businesses and tech start-ups will also be helped.

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Financial assistance will be increased for women on maternity leave, more daycare centres and nursing homes for the elderly are to be opened, while businesses hiring more full-time workers are to be given extra funding.

"We launched this extra budget as the high unemployment rate among young South Koreans will not be solved without drastic measures," Mr Park Chun Sup, the ministry's chief of budget, told reporters. "There is concern over potential mass unemployment... we have nearly 1.2 million young, jobless people," he said.

Decades of rapid growth saw the South rise from the ashes of the Korean War to become a member of the Organisation for Economic Cooperation and Development group of leading economies, but expansions have slowed more recently.

Economic frustrations were among factors that fuelled the mass anti-corruption protests that saw former president Park Geun Hye impeached and arrested over graft.

Mr Moon has described creating jobs, especially for the young, as a top policy priority.

Unemployment among under-30s hit 11.2 per cent in April, more than double the rate for the entire working population.

South Korea's economic growth, which hit 2.8 per cent in 2015 and last year, is expected to further slow to 2.6 per cent this year, according to the central Bank of Korea.

The country's birth rate is one of the world's lowest and has led to concerns about the burden of welfare funding for the ageing population.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on June 06, 2017, with the headline 'S. Korea unveils $13.8b stimulus package to boost jobs, welfare'. Print Edition | Subscribe