From Beauty Salons to Arcades... Disaster Relief Funds Increase Amid Strengthened Quarantine Measures

Social Distancing Divided into 5 Levels from 3 Levels
3rd Disaster Relief Fund Expected to Cover More People than 2nd Round

As the government decided to extend the enhanced social distancing level 2.5 in the Seoul metropolitan area until the 13th, an arcade in Hongdae, Seoul, was closed and empty on the weekend of the 6th. Photo by Moon Honam munonam@

[Asia Economy Reporter Jang Sehee] As the government raised social distancing measures in the metropolitan area and provinces from the 8th to the 28th, the resulting economic shock is expected to grow even larger. Since the government provided additional amounts to restricted and business suspension sectors during the second round of disaster relief payments, newly added sectors are likely to receive higher payments.

According to the Ministry of Economy and Finance on the 12th, the third round of disaster relief payments will refer to the method used in the second round but will calculate the amount considering the scale of damage.

A government official stated, "Since the quarantine guidelines have been subdivided after the second round of disaster relief payments, we are reviewing the disaster relief payments from scratch to fit the current situation."

After the second round of disaster relief payments, the quarantine guidelines, which were at three levels, have been subdivided into five levels, making it inevitable to reconsider the disaster relief payment targets accordingly. During the second round of disaster relief payments, the government provided 2 million won to business suspension sectors, 1.5 million won to sectors with operating hour restrictions, and 1 million won to general sectors with decreased sales.

As the government raised social distancing from level 2 to 2.5, operations such as beauty salons and arcades were suspended after 9 p.m. If classified as restricted sectors, they are expected to receive an additional 500,000 won on top of the general sector payment. During the second round of disaster relief payments, sectors with operating restrictions included general restaurants, cafes, bakeries, and franchise-type coffee, beverage, bakery, and ice cream specialty stores in the metropolitan area.

Furthermore, since the government's quarantine guideline period is longer than in August, an increase in payment amounts seems inevitable.

On the 9th, the online application for emergency loans of up to 20 million won for small business owners closed within about five hours of opening. This was due to a sharp decline in sales caused by repeated social distancing measures. Currently, a 3 trillion won third round of disaster relief fund is included in next year's budget, but the government plans to decide the payment amount after assessing the scale of damage.

In this regard, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated, "The government plans to aim to provide payments to the affected groups before the Lunar New Year holiday next year, as much as possible."