[2023 Budget] Increased Welfare Including Semi-basement Moving Support and Livelihood Benefits Raise... Job and SOC Budgets Cut

Increase in Median Income and Basic Pension for Elderly, Support for Semi-basement Housing... 58 Trillion Won for Social Safety Net and Vulnerable Groups
R&D Surpasses 30 Trillion Won for the First Time... Private Sector Drives Dynamic Economy
Significant Cuts in Government Short-term Jobs and SOC Budget, Key Projects of Moon Administration

[Asia Economy Sejong=Reporters Kwon Haeyoung and Mun Jewon] The government will invest about 58 trillion won next year to raise the median income standard, increase the basic pension for the elderly, and support vulnerable groups such as those living in semi-basements and jjokbangchon (small rooms). While shifting from expansionary fiscal policy to a 'sound fiscal' stance, the welfare budget for building social safety nets and supporting vulnerable groups has been increased. In addition, the government plans to foster future industries such as semiconductors, next-generation mobile communications, and bio industries, and expand research and development (R&D) investment to drive a 'private sector-led dynamic economy.' On the other hand, the social overhead capital (SOC) budget for next year will be cut by about 10% compared to this year, and major projects from the previous administration, such as job creation budgets, will be drastically restructured.

According to the '2023 Budget Proposal' announced by the Ministry of Economy and Finance on the 30th, the health, welfare, and employment budget for next year 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 for next year rising by a record 5.47%, the livelihood benefit amount will increase from 1.54 million won to 1.62 million won per month (for a family of four). Accordingly, the payment scale for the seven basic livelihood security benefits, including livelihood, medical, and housing benefits, will expand from 16.4 trillion won this year to 18.7 trillion won next year. The number of low-wage workers, special types of workers (teukgo), and artists incorporated into the social insurance system will increase from 1.01 million this year to 1.29 million next year, with social insurance premium support. To this end, for artists and teukgo workers, the workplace criteria will be expanded from fewer than 10 employees to all workplaces, and the income eligibility 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-basements and jjokbangchon, who suffered significant damage from recent floods, enabling them to move to normal residences without personal burden by providing moving expenses 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 up to 50 million won for moving deposits. To prevent jeonse fraud and protect victims, an average annual support of 61,000 won for advance guarantee subscription fees and emergency loans up to 160 million won will be provided.

Support for the elderly and disabled will also be expanded. Disability allowances will be raised from 40,000 won to 60,000 won per month for the first time since 2015, and budgets related to developmental disabilities, including guaranteeing 8 hours of daytime care, 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. Specifically, 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 increase from 237,000 to 275,000 positions. In addition, 24.1 trillion won and 1.6429 trillion won are allocated for youth support projects and low birthrate response budgets, respectively.

The government also aims to realize a dynamic economy led by the private sector. In particular, the government R&D budget exceeded 30 trillion won for the first time this year, increasing by 3.0% compared to the previous year. The government plans to focus investment 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 creation budget, which had expanded greatly under the previous administration. Since the Yoon Seokyeol 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 creation budget for next year is 30.0282 trillion won, a reduction of 1.9069 trillion won (5.9%) compared to this year. The core strategy is to reduce direct government support such as direct jobs and employment incentives, and strengthen support for private sector job placement. Also, 47,000 direct jobs such as elderly jobs, local quarantine jobs, and child safety guardians will be abolished or transferred to local governments next year. Employment incentives such as the youth additional employment incentive and employment retention support will be cut by 1.4247 trillion won, and startup support funds and the national employment support system budget 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 SOC budget, which has maintained an expansionary stance for the past four years, will also be restructured. The SOC budget for the entire government, including the Ministry of Land, Infrastructure and Transport, will be 25.1213 trillion won next year, a 10.2% cut compared to this year.

The budget for industry, small and medium enterprises, and energy sectors will also sharply decrease from 31.3292 trillion won this year to 24.6664 trillion won next year, a 21.3% drop. As the Korean economy gradually recovers from COVID-19, the budget for fostering small and medium enterprises 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.