14m lower-income families in South Korea to get shopping vouchers as part of govt relief scheme amid Covid-19 outbreak

Every lower-income family in South Korea will receive up to 1 million won (S$1,180) in vouchers as part of a government "emergency disaster relief" scheme for those in financial difficulty during the coronavirus outbreak.

President Moon Jae-in announced the one-time measure yesterday when he chaired a meeting focused on mitigating the economic fallout from the outbreak.

The scheme will benefit about 14 million families in a nation with 35 million households.

The government will be submitting a second supplementary budget worth 7.1 trillion won to Parliament to finance the scheme, and hopes to get this passed by the end of April.

Parliament has already approved an 11.7 trillion won supplementary budget to fight the virus, and a separate 50 trillion won aid package to help struggling small and medium-sized enterprises (SMEs).

Finance Minister Hong Nam-ki told a press conference yesterday that the government had decided to give shopping vouchers and gift certificates instead of cash to stimulate spending.

This is the first time that a South Korean government is providing financial aid during a national crisis, although it has ignored proposals for cash handouts to everyone, regardless of income.

Mr Moon said the decision to support only lower-income families was made after several discussions and debates.

"Everyone suffered from the outbreak and participated in quarantine measures, and everyone deserves compensation for their suffering and efforts," he said.

"But the government needs to conserve as much financial resources as possible... For those who are more capable financially, I seek their understanding in making concessions for those who earn less."

The governor of Gyeonggi province, Mr Lee Jae-myung, who is from the ruling Democratic Party, sparked a debate last week when he announced that the provincial government would give vouchers worth 100,000 won to all of its 13.2 million residents in April. The vouchers can be used only at stores run by SMEs.

 
 
 

Mr Lee has been among those who have called on the country to offer some sort of "basic disaster income" for people whose lives have been disrupted by the outbreak.

But the proposal drew flak from the opposition, which described it as a populist move aimed at winning votes at the general election slated for April 15.

Even the finance minister objected to cash handouts.

"Giving money when there is no place to spend it could result in a policy mismatch," Mr Hong said in a Facebook post last Wednesday.

Economists have also warned against monetary aid across the board.

Such a policy "fails to address how best to help those hit hardest, such as small merchants and low-income earners recently laid off or who have had their pay cheque reduced", Seoul National University economist Kim So-young told The Korea Times newspaper.

In further government assistance to lower-income families, they will be allowed to pay lower premiums for four types of social insurance, including for healthcare and pensions.

Mr Hong said yesterday that the government would mobilise all resources and "act boldly and quickly until the crisis ends".

 
A version of this article appeared in the print edition of The Straits Times on March 31, 2020, with the headline '14m lower-income families in S. Korea to get shopping vouchers'. Print Edition | Subscribe