[2023 Budget] Welfare Increased by 8.9 Trillion Won Including Moving Support for Banjiha and Jjokbang... Job Budget Cut

Ministry of Economy and Finance Announces '2023 Budget Proposal'
Welfare Budget Increased by 8.9 Trillion Won Despite Shift to Sound Fiscal Policy...Next Year’s Median Income and Basic Pension Raised
24.1 Trillion Won Allocated for Comprehensive Support of Youth Asset Formation, Housing, and Jobs
R&D Budget Grows 3.0% to Surpass 30 Trillion Won for the First Time...Job Budget Cut While Private Sector-Linked Budget Increased

[Asia Economy Sejong=Reporters Haeyoung Kwon, Muneowon Moon] The government will invest approximately 58 trillion won next year in building social safety nets and supporting vulnerable groups, including raising the median income standard, increasing the basic pension for the elderly, and providing support for semi-basement and gosiwon residents. Despite shifting from an expansionary fiscal policy to a 'sound fiscal' stance, welfare budgets such as social safety net construction and support for vulnerable groups have been increased. The government plans to foster future industries such as semiconductors, next-generation mobile communications, and bio industries, and expand research and development (R&D) investments to drive a 'warm country' and a 'private sector-led dynamic economy.' While significantly cutting job budgets previously supported by taxes under the former administration, the scale of private-sector-linked job support will be expanded.

The Ministry of Economy and Finance announced the '2023 Budget Proposal' containing these details on the 30th. According to the government budget proposal, next year's health, welfare, and employment budget will be 226.6 trillion won, an increase of 4.1% (8.9 trillion won) compared to the previous year. The government allocated 31.6 trillion won for building social safety nets and 26.6 trillion won for protecting socially vulnerable groups.

First, with the median income standard rising by a record-high 5.47% next year, the livelihood benefit amount will increase from 1.54 million won to 1.62 million won per month (based on a family of four). Accordingly, the total payment for the seven basic livelihood security benefits, including livelihood, medical, and housing benefits, will increase from 16.4 trillion won this year to 18.7 trillion won next year. The number of low-wage workers, special types of workers (STW), and artists incorporated into the social insurance system will increase from 1.01 million this year to 1.29 million next year, expanding social insurance premium support. To this end, for artists and STWs, the workplace size criterion will be expanded from fewer than 10 employees to all workplaces, and the income eligibility threshold for support will be raised from 120% to 130% of the minimum wage.

Additionally, 300 billion won will be newly invested to support vulnerable groups living in semi-basement and gosiwon areas severely affected by recent floods, enabling them to move to normal residences without personal expenses by providing moving costs and deposits. As a result, a total of 15,000 households will receive 400,000 won for moving expenses and daily necessities support, and interest-free loans of up to 50 million won for moving deposits. To prevent jeonse fraud and protect victims, an average annual support of 61,000 won will be provided for pre-guarantee subscription fees, and up to 160 million won will be supported through emergency loans after the fact.

Support for the elderly and disabled will also be expanded. Disability allowances will be raised for the first time since 2015 from 40,000 won to 60,000 won per month, and budgets related to guaranteeing eight hours of daytime care for people with developmental disabilities will increase from 5.1 trillion won this year to 5.8 trillion won next year. The elderly-related budget will also expand from 17.4 trillion won this year to 20.1 trillion won. The basic pension for the elderly will increase from 308,000 won to 322,000 won per month, and private and social service-type jobs will expand from 237,000 to 275,000 positions.

To continuously support youth, 24.1 trillion won will be allocated. Through supplying 300,000 youth cost-price houses, 200,000 first homes near subway stations, and support for youth lump-sum savings, comprehensive support for asset formation, housing, and jobs for the 20-30 age group will be provided.

To address low birth rates, a maximum monthly parental allowance of 700,000 won will be paid to households raising children aged 0 to 1. Accordingly, the related budget has increased from 373.1 billion won this year to 1.6429 trillion won next year.

The government will also realize a dynamic economy led by the private sector. In particular, the government R&D budget has increased by 3.0% compared to the previous year, surpassing 30 trillion won for the first time this year. The government plans to focus investments on R&D and human resource development in future industry technologies such as semiconductors, 5G and 6G mobile communications, space, and advanced bio industries to improve budget efficiency. Especially for semiconductors, the budget for developing core next-generation semiconductor source technologies has been significantly increased to secure a super-gap over competing countries.

On the other hand, the government has significantly reduced the job sector budget, which had greatly expanded under the previous administration. Since the Yoon Seok-yeol administration's policy is 'private sector-led economic growth,' it plans to transform the unsustainable short-term job projects maintained by government budgets into an efficient structure.

Accordingly, the job project budget for next year is 30.0282 trillion won, a reduction of 1.9069 trillion won (5.9%) compared to this year. Direct government support such as direct jobs and employment incentives will be reduced, while support for private-sector job placement will be strengthened. The budget for private-sector job linkage, including vocational training and employment services, will increase from 3 trillion won this year to 3.3 trillion won next year.

Additionally, next year, 47,000 direct jobs such as elderly jobs, local quarantine jobs, and child safety guardians will be abolished or transferred to local governments. Employment incentives such as youth additional employment incentives and employment retention subsidies will be cut by 1.4247 trillion won, and budgets for startup support and the national employment support system will be reduced by 226.4 billion won and 200 billion won, respectively. Unemployment income such as job-seeking benefits will also be cut by 340 billion won.

The budgets for industry, small and medium enterprises, and energy sectors will also sharply decline by 21.3%, from 31.3292 trillion won this year to 24.6664 trillion won next year. As the Korean economy gradually recovers from COVID-19, the budget for fostering SMEs and small business owners will be cut by more than 5 trillion won, and support for startups and venture companies will shift from government-led to private-centered, reducing the budget by about 600 billion won.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated, "We have focused on three directions in preparing next year's budget: expanding protection for low-income and socially vulnerable groups, supporting a private sector-led dynamic economy, and strengthening national safety and the role as a global pivotal country."