[What Do You Think?] Support Must Be Broad and Sufficient by Selecting Victim Groups

Takryu Cheongron is a column featuring in-depth analysis and diagnosis by experts in the relevant fields on socially contentious topics. This week's topic is the disbursement of emergency disaster relief funds.

The COVID-19 crisis continues. Recently, the number of new infections, which had dropped to the high 200s, has risen to the 600s after the Lunar New Year holiday. The situation worsens rapidly with even slight relaxation of social distancing. Therefore, current social distancing, business restrictions, and business closures must continue until vaccination is completed. These quarantine measures threaten the lives of a wide range of vulnerable groups. Although the third round of disaster relief funds is being distributed, plans for the fourth round must be expedited.

In this regard, controversy continues over whether the fourth disaster relief fund should be given selectively to affected groups or universally to all citizens. If the same scale of fiscal resources is mobilized, it is naturally more effective to concentrate support on the affected groups. Those who prefer the universal approach argue that the current crisis affects the entire population and it is difficult to identify who has been affected and to what extent. However, upon examining these claims one by one, they lack some persuasiveness.

First, while it is true that all citizens are experiencing difficulties due to social distancing, there are differences in economic impact. People with stable jobs have not suffered significant damage, and some have found more leisure through remote work. Moreover, non-face-to-face and bio sectors are actually thriving. Professionals providing small-scale face-to-face services and landlords receiving fixed rents are not facing major difficulties.

Second, the issue of whether affected groups can be selectively identified is challenging but not impossible. Germany distinguished the degree of damage based on sales decline and supported affected groups broadly and substantially by subsidizing part of fixed costs such as rent. It is true that there are concerns about whether we have such capabilities. In Korea, the self-employed sector has been criticized for inaccurate income reporting and tax evasion. However, with increased use of credit cards and electronic tax invoice issuance, the ability to assess income has greatly improved compared to before.

Finally, there is an argument that distributing disaster relief funds universally will increase sales for small business owners and boost consumption, which is desirable for the macroeconomy as a whole. While this is true, it is difficult to see it as more effective than policies that directly provide income to the self-employed under current circumstances. What matters to the self-employed is income generated from sales. Although increased sales lead to increased income, excluding raw material costs, total sales cannot be equated with income. If the same amount is spent as universal disaster relief funds, the portion that translates into income for the self-employed would be smaller than that from direct support.

Therefore, the desirable method of distributing disaster relief funds under current circumstances is to carefully select and sufficiently support the affected groups. Although the third tailored damage support measure was announced with a scale exceeding 9 trillion won, actual support falls short of 5 trillion won upon closer inspection. Hence, the fourth disaster relief fund should adopt a selective approach but support broadly and substantially, including not only the self-employed, special-type workers (teukgo), and freelancers but also temporary and daily workers, approaching a near-universal scope.