South Korea’s Parliament gives nod to RM42b extra budget plan

SEOUL • South Korea’s Parliament approved an extra budget that had been caught up in a fight between the new government and the Opposition for the past month.

The 11 trillion won (RM41.8 billion) in extra spending is the centrepiece of President Moon Jae-in’s plans to create tens of thousands of new jobs and boost growth. Budget approval was delayed after disagreement between the ruling and opposition parties over a number of issues, including the president’s nominations for various offices.

The extra money will help Korea return to 3% gross domestic product growth, President Moon said during a Cabinet meeting in June, but the delay raised concerns about how the new government would actually implement its economic policies, given that it doesn’t have a parliamentary majority.

The Parliament has cut back about 150 billion won from the initial 11.2 trillion won plan that would have created about 110,000 new jobs both directly and indirectly, according to the finance ministry. Most of those would be in the public sector, including police, firefighters, assistant teachers and social workers. Due to the revision, a slight portion of the extra budget initially allotted for creating jobs will go to aiding recent drought damages and the upcoming Olympics.

Opposition lawmakers reviewing the extra budget plan last week raised questions about whether the country should add new public-sector jobs. Recruiting more civil servants will be a burden to future generations because public jobs have a guaranteed tenure, said Opposition lawmaker Min Kyung-wook of Liberty Korea Party, who called the plan a “populist act”.

Some lawmakers also questioned whether an extra budget was necessary at all. South Korea’s economy has recently been show- ing signs of recovery with exports rising for an eighth straight month. The Bank of Korea on July 13 raised the country’s growth forecast for this year to 2.8% from a previous 2.6%.

However, Finance Minister Kim Dong-yeon said last Sunday that the country’s employment problem is getting worse and the potential economic growth rate is projected to fall. Youth joblessness has worsened in recent years, and is almost three times as bad as the overall unemployment rate. — Bloomberg