[Exclusive] Employment Support for Middle-Aged and Older Adults and Economic Cooperation Promotion Funds... President Moon's National Tasks Budget Cut One After Another

Significant Cuts to 'Job Budgets' for Youth and Elderly
Opposition Demands Full 600 Billion KRW Cut to KDB New Deal Fund Investment

[Asia Economy Reporter Jang Sehee] As the National Assembly's Special Committee on Budget and Accounts has completed the first round of budget cuts for next year's budget proposal, it has been confirmed that the budgets related to the 100 major national tasks announced by the Moon Jae-in administration at the time of its inauguration were consecutively reduced during the standing committee review process. Most of these are projects with poor past execution performance or unclear project plans.

According to the '2021 Budget Proposal and Fund Operation Plan Budget Adjustment Subcommittee Review Materials' obtained by Asia Economy on the 25th, the relevant standing committees significantly cut the government budget. Normally, if the Budget and Accounts Committee wants to increase the amount cut by the standing committee, it must obtain the standing committee's consent again, but by custom, this consent is not obtained.

First, the budgets related to jobs, which have been controversial regarding their effectiveness, were consecutively cut. Although the Moon administration emphasized a 'job government' and announced plans to strengthen job safety nets in preparation for unemployment and retirement, budgets for both youth and elderly jobs were cut.

The budget for the youth industrial field work-study dual support project was cut by 4.5 billion KRW. This is because the employment retention rate six months after the completion of work-study dual training for learning workers has been low. In fact, the six-month employment retention rate sharply dropped from 75.5% in 2017 to 54.9% last year. This project aims to support companies in hiring youth who want to be employed as learning workers and providing on-site training to cultivate practical talents in industrial fields.

Additionally, the budgets for support for social contribution activities of the new middle-aged and employment support projects for middle-aged and older adults were cut by 3.523 billion KRW and 425 million KRW, respectively. Both projects were significantly reduced due to unclear demand for the projects.

As inter-Korean relations have become strained, many projects related to inter-Korean economic cooperation for next year were also cut. The operating expenses for the Northern Economic Cooperation Committee were cut by 160.5 million KRW, and the budget for the interest subsidy project for economic cooperation promotion funds was cut by 496 million KRW. The interest subsidy project for economic cooperation promotion funds involves providing low-interest, long-term financial support for development projects in developing countries based on resources procured (market borrowing) by the Korea Export-Import Bank. However, the projects budgeted for 2020 have not been approved as of the end of September, and there have been no execution results as of the end of September, leading to the cuts.

Other cuts include 61 billion KRW for the home smart power platform project, 16 billion KRW for the Information and Communication Technology (ICT) Convergence Smart Factory project, and 6.51 billion KRW for the industrial accident hospital support project.

In the future, the budget related to the 'Korean New Deal' for responding to the novel coronavirus disease (COVID-19) crisis is also expected to be significantly cut. Budget and Accounts Committee members from the People Power Party?Chu Kyung-ho, Kim Hyung-dong, Park Sung-min, and Lim Eui-ja?have argued for a full cut of 600 billion KRW for the New Deal Fund project under the jurisdiction of the Financial Services Commission and the Korea Development Bank. They pointed out that it is inappropriate for the government to bear the risk of loss with public funds, and that the differences between the New Deal Fund and other funds such as the Ministry of SMEs and Startups' mother fund are unclear and the project plans are insufficient.

Furthermore, Budget and Accounts Committee members from the People Power Party have also proposed cuts to the hydrogen fuel cell vehicle distribution project by 440.083 billion KRW, the smart local water supply support project by 452.555 billion KRW, and the aged water supply maintenance (regional support) project by 453.14 billion KRW.

Meanwhile, the 2021 budget will be finalized once it passes the plenary session after review by the National Assembly's Budget and Accounts Committee.