[Weekly Review] '3 Million Small Business Owners Get 3 Million Won Each' 14 Trillion Won Snowflake Supplementary Budget... Implications of Scientific Investigation on Serious Accidents

Moon Jae-in Administration Covers 151.3 Trillion Won with 10th Supplementary Budget
National Debt at 1,075.7 Trillion Won... Debt-to-GDP Ratio at 50.1%

Serious Accident Scientific Investigation Targets Large Corporation CEOs
Forensic and Search Warrants Conducted from Initial Investigation Phase

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, speaking at the briefing on the '2022 Supplementary Budget' at the Government Seoul Office in Jongno-gu, Seoul, on the 21st.

[Sejong=Asia Economy Reporter Moon Chaeseok] The government has unveiled a supplementary budget (supplementary budget) card worth 14 trillion won at the beginning of the new year. The supplementary budget plan was prepared to support small business owners who suffered damage due to COVID-19 quarantine measures, and it is scheduled to be submitted to the National Assembly on the 24th. This is the tenth supplementary budget submitted to the National Assembly since the Moon Jae-in administration. The Ministry of Employment and Labor announced that it plans to conduct scientific investigations, including forensic analysis and search and seizure, in the first investigation related to the Serious Accident Punishment Act, which punishes corporate executives responsible for serious accidents with up to one year imprisonment and fines of up to 1 billion won, drawing attention from the labor sector.

14 Trillion Won Snowflake Supplementary Budget... National Debt Ratio to GDP at 50.1%

The prolonged COVID-19 crisis has deepened the worries of small business owners and self-employed individuals. A closed store in Myeongdong, Seoul. Photo by Mun Ho-nam munonam@

On the morning of the 21st, Prime Minister Kim Boo-kyum held an extraordinary cabinet meeting at the Government Complex Seoul and approved a supplementary budget plan worth 14 trillion won to support small business owners and quarantine efforts.

The quarantine support fund will be expanded from 1 million won to 3 million won, and support will be provided not only to small business owners who suffered damage due to COVID-19 related gathering bans and business restrictions but also to the travel and accommodation industries. A total of 9.6 trillion won in funds will be invested in quarantine support for 3.2 million small business owners and small enterprises. Additionally, 1.9 trillion won will be spent to provide an advance loss compensation payment of 5 million won to about 900,000 small business owners and small enterprises. 1.5 trillion won will be spent on strengthening quarantine measures such as securing hospital beds and purchasing treatments, and 1 trillion won will be allocated to reinforce contingency funds to respond to quarantine expenditures due to the spread of the Omicron variant.

Support payments are expected to be made as early as mid-next month. Of the 14 trillion won, 11.3 trillion won will be raised through deficit bond issuance, and 2.7 trillion won will be secured from surplus funds of the Public Fund Management Fund. According to this supplementary budget plan, the government's total expenditure this year will increase by 11.4% to 621.7 trillion won compared to last year's main budget of 558 trillion won, and the integrated fiscal balance deficit will increase to 68.1 trillion won. National debt will rise to 1,075.7 trillion won, making the national debt ratio to gross domestic product (GDP) 50.1%.

Moreover, there is a strong consensus inside and outside that the supplementary budget projects are likely to be significantly expanded during the National Assembly review process. This 'January supplementary budget,' the fastest ever, is likely to be the last and tenth supplementary budget under the Moon Jae-in administration. Over the past five years, the government has prepared supplementary budgets every year without fail, increasing expenditures, with a total supplementary budget amounting to 151.3 trillion won. Because of this, concerns about deteriorating fiscal soundness are growing.

Scientific Investigation of Serious Accidents Targeting CEOs of Large Corporations

Park Hwa-jin, Vice Minister of Employment and Labor, announcing the preparation status for the enforcement of the Serious Accidents Punishment Act at the government Seoul office briefing room on the 20th. (Image source=Yonhap News)

With the Serious Accident Punishment Act set to take effect in five days, the Ministry of Employment and Labor's announcement that it will use 'scientific and compulsory investigation' techniques in the first investigation has led to analyses that it is effectively targeting CEOs of large corporations. The business community believes that there is a high possibility that management will be prosecuted during the high-intensity investigation process, which includes forensic techniques, and in the worst case, management vacancies could occur during the trial process after corporate appeals.

On the 20th, Park Hwa-jin, Vice Minister of Employment and Labor, explained during a briefing on the preparation status for the law's enforcement, "Existing investigations under the Industrial Safety and Health Act focus on whether the rules under the Industrial Safety and Health Act were properly followed, but the Serious Accident Punishment Act pursues the responsibility of companies (management executives, etc.) who failed to fulfill safety and health management obligations, so it will be different from past (Industrial Safety and Health Act) investigations." He added, "Scientific investigations and compulsory investigation methods that the Ministry of Employment and Labor has not used before are expected to be utilized." He explained how investigations under the Serious Accident Punishment Act would differ from existing supervisory investigations by the Ministry of Employment and Labor if a case similar to the HDC Hyundai Development Company collapse accident in Gwangju occurs.

The scientific investigation techniques proposed by the Ministry of Employment and Labor in the first investigation are much stronger cards than the existing method of summoning management executives to the local employment and labor office with jurisdiction over the accident to hear the company's explanation and conduct face-to-face investigations. They are based on forensic analysis and search and seizure at the headquarters of the primary contractor. The scope of the investigation will also expand from occupational manslaughter to whether the primary contractor issued safety and health management system instructions and the specific status of securing personnel and budget. According to the Ministry of Employment and Labor's announcement on the 10th, if the Serious Accident Punishment Act had been applied last year, 190 management executives would have been subject to investigation. As the initial investigation intensity increases compared to last year, more than 190 management executives could be investigated in the 'first year of the Serious Accident Punishment Act' this year.