[Full Text] Hong Nam-gi "100 Million KRW Payment to Bottom 70% Income Households... 7 Trillion KRW Point Supplementary Budget"

"Emergency Disaster Relief Fund Benefits 14 Million Households... Expected to Ensure Livelihood and Stimulate Consumption"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said on the 30th regarding the emergency disaster relief fund, "It has been designed to provide 1 million KRW per four-person household to the bottom 70% income group (14 million households) to simultaneously ensure livelihood security and stimulate consumption."

At a joint briefing with related ministries held at the Government Seoul Office on the same day, Deputy Prime Minister Hong stated, "The required scale for this emergency disaster relief fund is about 9.1 trillion KRW, of which the government supplementary budget is expected to be about 7.1 trillion KRW."

The following is the full text of Deputy Prime Minister Hong's remarks.

Dear respected citizens,

The third emergency economic meeting presided over by the President to overcome the COVID-19 emergency economic situation has just concluded.

As COVID-19 spreads beyond Asia to the entire world,

the WHO has declared a pandemic,

and the global economy is facing an unprecedented crisis.

Due to movement restrictions in various countries, the global economy has come to a halt,

and as the contraction of the real economy spreads to financial markets, global financial market volatility has also expanded unprecedentedly.

The damage to our economy, which is highly dependent on external factors, is severe.

Companies, which are the foundation of the economy and the main creators of jobs,

are facing difficulties, and sectors directly hit such as tourism, aviation, and shipping are suffering even more.

Moreover, the "Social Distancing" that all citizens participate in for quarantine purposes

has brought about the achievement of preventing the spread of COVID-19,

but inevitably has caused difficulties such as economic activity contraction.

Small business owners and self-employed individuals whose sales have drastically dropped due to COVID-19,

and citizens suffering from leave or unemployment urgently need a support system to endure these hardships.

Recognizing this, the government has been preparing and announcing response measures step-by-step and strategically to minimize damage and protect citizens' lives.

Starting with emergency quarantine, a comprehensive package worth 32 trillion KRW, a Korea-US currency swap agreement worth 60 billion USD, and

extraordinary measures to save companies and protect jobs,

a comprehensive livelihood and financial stability package program worth over 100 trillion KRW has also been announced.

However, the situation has prolonged longer than initially expected,

and predicting when our economy will normalize has become more difficult.

Furthermore, the damage has spread beyond low-income groups and small business owners,

and its scale has increased,

with companies also facing greater difficulties.

With an urgent awareness of this situation, the government aims to expand the support targets of government measures and strengthen support for beneficiaries so that our economy and people can endure and recover.

In this regard,

as decided at today's emergency economic meeting,

we have confirmed and announced measures to ease the burden of the four major social insurance premiums

and to provide emergency disaster relief funds.

First, I will explain the measures to ease the burden of social insurance premiums.

The four major social insurances

are representative social safety nets that support our society against major life risks such as illness, old-age poverty, unemployment, and industrial accidents.

The government has continuously supported low-income workers, special-type workers, and workers in crisis areas by reducing premiums to ensure they are not excluded from the social insurance system.

However, this crisis affects a wide range of people,

and the existing system with limited support targets

has limitations in responding.

Especially, for low-income households struggling to make a living due to COVID-19

and business owners facing the risk of closure or bankruptcy, even the monthly payment of the four major insurance premiums

has become an additional burden.

Therefore, for low-income households currently facing livelihood difficulties and business owners at risk of closure or bankruptcy,

we have prepared additional programs such as easing the burden of social insurance premiums

to have an immediate income compensation effect.

Focusing on measures that can be implemented immediately without legal amendments,

we will defer payments for three months for national, employment, and industrial accident insurance,

and additionally reduce 30% of premiums for health and industrial accident insurance for 3 to 6 months.

Each deferment and reduction measure will, in principle, apply from the March premiums payable in April.

First, I will explain health insurance and national pension, which have the broadest coverage and significantly affect the lives of ordinary citizens.

Health insurance premium reductions will be expanded.

Through the last supplementary budget, a 50% reduction for three months was introduced for 5.46 million people in the bottom 20% income group (50% in special disaster areas),

and this will now be expanded to the bottom 40%,

with an additional 30% premium reduction for 4.88 million people for three months.

While deferral of health insurance payments was considered,

it requires legal amendments, so only reductions are prioritized in this measure.

Next, the national pension will temporarily expand the exemption from payment for three months.

Any national pension subscriber who can prove income reduction and applies will be eligible for a three-month exemption.

For workplace subscribers, previously exemptions were granted only in cases of leave or unemployment with income loss, but now,

exemptions will also be granted if income decreases and the worker agrees.

Proof of income reduction will be simplified as much as possible to a worker's consent form and pay statement.

For regional subscribers, the scope of income reduction recognition such as business suspension or three months of deficit will be temporarily broadened.

When resuming payments, the exempted period can be paid in installments over up to 60 months.

Due to the nature of the national pension, reduced payments and contribution periods result in reduced pension benefits.

Therefore, this measure focuses more on deferral than reduction.

Next, I will explain employment insurance and industrial accident insurance for business owners and workers.

Employment insurance payment deadlines will be extended for workplaces with fewer than 30 employees for three months.

This applies to about 6.12 million workers (44% of employment insurance subscribers) and 2.28 million workplaces (96.6%).

Payment deadlines will be extended upon application.

However, workers whose premiums are withheld from income may find it difficult to benefit from deferral, so we plan to request necessary measures such as suspension of withholding by employers during this period.

Regarding employment insurance, while payment deadline extension helps, the demand for employment insurance fund support projects such as unemployment benefits and employment retention subsidies has greatly increased due to worsening economic conditions.

Please check your eligibility and actively utilize benefits such as unemployment benefits and employment retention subsidies.

Industrial accident insurance will apply both deferral and reduction.

The targets include workplaces with fewer than 30 employees, self-employed individuals who voluntarily subscribe, workplaces employing special-type workers, totaling 2.59 million workplaces and 80,000 special-type workers.

Deferral will extend deadlines by three months upon application, similar to employment insurance,

and reduction will cut premiums by 30% for six months.

Based on employers who pay premiums, 96.4% of all industrial accident insurance subscribing workplaces will benefit.

Next, I will explain the measures to ease the burden of electricity bills.

For electricity bills,

payment deadlines for three months' bills from April to June will be extended for 3.2 million small business households and 1.57 million vulnerable households.

Even after the payment deadline extension ends,

installment payments will be allowed if necessary until the end of this year.

Through these social insurance premium burden easing measures,

7.5 trillion KRW in deferred payments and 0.9 trillion KRW in reductions are expected,

and the scale of electricity bill payment deadline extensions is expected to be about 1.3 trillion KRW.

Each deferment and reduction measure will, in principle, apply from the March premiums payable in April.

Detailed application procedures and required documents will be guided by related ministries, the National Health Insurance Service, the National Pension Service, the Korea Workers' Compensation and Welfare Service, and Korea Electric Power Corporation.

This social insurance and electricity bill burden easing program is an unprecedented large-scale measure never implemented even during the 1997 foreign exchange crisis or the 2008 global financial crisis.

Through these measures, many companies, workers, and self-employed individuals, including workplaces with fewer than 30 employees and low-income groups in the bottom 40% of premiums, are expected to receive help.

Next, I will explain the "Emergency Disaster Relief Fund Introduction Plan."

Due to the COVID-19 situation, vulnerable groups are more directly affected,

and small business owners and self-employed individuals are facing great difficulties due to mobility restrictions and sharp consumption declines,

and furthermore, all our citizens are going through a difficult process.

Accordingly, discussions have been ongoing domestically and internationally that the government should provide some emergency disaster relief funds to those in hardship.

Regarding the introduction and design of the emergency disaster relief fund,

various forms are seen depending on each country's situation and local government conditions,

but the government has prepared this "Emergency Disaster Relief Fund Introduction Plan" considering various discussion trends, support scope, support effects, and fiscal conditions.

The main framework of the emergency disaster relief fund

is designed to provide 1 million KRW per four-person household

to the bottom 70% income group (14 million households)

to simultaneously ensure livelihood security and stimulate consumption.

I will explain more specific details of this support.

First, considering the expanding scope of damage caused by COVID-19,

the target was set to the bottom 70% income group, 14 million households.

This will strengthen the safety net for low-income groups already protected,

and allow groups not previously included in support to benefit from this emergency safety net.

However, due to various conditions, the top 30% income group could not be included,

and we ask the public to kindly understand this.

Second, the support amount per household will be differentiated according to household size.

Single-person households will receive 400,000 KRW, two-person households 600,000 KRW, three-person households 800,000 KRW, and four or more person households will receive 1 million KRW.

Third, considering that local governments have a strong willingness to support the emergency disaster relief fund and better understand local conditions, the central government and local governments will collaborate

to jointly implement this emergency disaster relief fund support.

Accordingly, the cost will basically be shared 80:20 between the government and local governments (with differentiated negotiation for Seoul).

Fourth, the required scale for this emergency disaster relief fund is about 9.1 trillion KRW,

and the government supplementary budget is expected to be about 7.1 trillion KRW.

The government plans to conduct a one-point supplementary budget solely for the emergency disaster relief fund

to ensure it reaches citizens who are facing increasing difficulties as quickly as possible.

The supplementary budget will be funded as much as possible by restructuring existing expenditure projects.

Specifically, projects expected to be delayed in execution due to COVID-19,

projects with reduced costs due to falling oil prices and interest rates, and projects where execution savings can be actively sought will be identified to the fullest extent.

Since this supplementary budget is urgent support that must reach citizens as soon as possible, we plan to prepare the supplementary budget as quickly as possible

and submit it to the National Assembly promptly.

We ask the National Assembly for special attention and active cooperation to ensure the supplementary budget is reviewed and passed quickly.

We will closely coordinate project plans with local governments in advance,

and while basically meeting the government's proposed measures,

we will allow flexible adjustments in execution methods and additional support to suit field conditions.

Dear citizens,

Unlike difficulties we have faced before, COVID-19

is not limited to specific groups or regions,

but is a new form of national disaster affecting the daily lives of all our citizens.

Around us now are

daily workers whose livelihoods have become desperate,

youths who lost part-time jobs,

small business owners running empty tables and shops,

and unpaid leave workers whose income suddenly dropped significantly,

all going through difficult and hard times.

The government promises to be a strong support for citizens passing through the COVID-19 death valley.

Considering the urgency of the situation,

this time we will conduct a one-point supplementary budget for the emergency disaster relief fund,

but if more citizens need help,

the government is ready to provide additional support at any time.

Until the crisis ends,

the government pledges to mobilize all resources and capabilities

to respond boldly and swiftly.

Based on the resilience of our citizens reaffirmed this time,

we will overcome the COVID-19 crisis early and prepare so that this crisis becomes a new leap forward for our economy.

Finally, I express my gratitude to all citizens who are doing their best with one heart and one mind in various fields to overcome this crisis despite the difficult situation.

Thank you.