{"id":2202385,"date":"2023-09-29T17:00:20","date_gmt":"2023-09-29T08:00:20","guid":{"rendered":"https:\/\/koreapro.org\/?p=2202385"},"modified":"2023-10-02T18:13:08","modified_gmt":"2023-10-02T09:13:08","slug":"yoons-budget-shifts-south-koreas-economic-strategy-amid-political-tensions","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/09\/yoons-budget-shifts-south-koreas-economic-strategy-amid-political-tensions\/","title":{"rendered":"Yoon’s budget shifts South Korea\u2019s economic strategy amid political tensions"},"content":{"rendered":"

Ahead of next year\u2019s legislative elections scheduled for April 10, the Yoon Suk-yeol administration has unveiled its 2024 budget proposal, stepping into a charged political arena.\u00a0<\/span><\/p>\n

The ruling People Power Party (PPP) is strategically positioning itself against the dominant Democratic Party (DP) in the National Assembly. With both parties separated by a <\/span>razor-thin margin<\/span><\/a> in public support \u2014 PPP at 33% and DP at 32% \u2014 the budget\u2019s details and implications are likely to become central to their electoral campaigns.<\/span><\/p>\n

South Korea finds itself at an economic crossroads, with major global institutions predicting modest growth of around <\/span>1.5%<\/span><\/a>. Against this backdrop, the budget\u2019s conservative approach is notable and potentially controversial. The smallest spending increase since 2005, coupled with a measured 0.6% rise in government debt, signifies a sharp pivot from the Moon Jae-in era\u2019s expansive fiscal policies.<\/span><\/p>\n

By <\/span>scaling back subsidies<\/span><\/a>, the Yoon administration signals its commitment to a more conservative economic philosophy, even as the DP <\/span>argues<\/span><\/a> for preserving existing support measures and more aggressive economic interventions during such challenging times.<\/span><\/p>\n

While the administration might believe that a restrained fiscal approach will address concerns about the long-term health of the economy, it remains to be seen if this budgetary stance will translate into electoral success for the PPP.<\/span><\/p>\n

TARGETING ELDERLY VOTE<\/b><\/p>\n

The 2024 budget is aimed squarely at seniors, a traditionally conservative voting group that Yoon has been actively courting. Their support was evident in the previous presidential election when exit polls suggested Yoon secured approximately <\/span>67%<\/span><\/a> of voters over the age of 65. With the number of senior citizens recently exceeding 10 million, their electoral importance cannot be overstated.<\/span><\/p>\n

In response to this demographic trend, the government plans to introduce <\/span>147,000 new job opportunities<\/span><\/a>, ensuring 10.3% of South Korean seniors can work in social service roles. The proposed remuneration for these jobs is set to double, depending on the nature of their responsibilities.<\/span><\/p>\n

South Korea\u2019s challenge lies in its elderly poverty rate: at <\/span>40.4%<\/span><\/a>, it\u2019s the highest among Organization for Economic Co-operation and Development nations. Further, 34.9% of Koreans aged 65 and older are still in employment, often settling for low-paying, part-time roles.<\/span><\/p>\n

Data from Dec. 2022 shows that 67.5% of Koreans in this age bracket benefit from a <\/span>basic pension<\/span><\/a>, a welfare scheme distinct from <\/span>old-age pension<\/span><\/a>. A basic pension aids elderly individuals within the lower 70% income tier. During his campaign, Yoon expressed intentions to increase these payouts for single-person households.<\/span><\/p>\n

However, there\u2019s a monetary gap. The <\/span>average pension<\/span><\/a> from the National Pension Service stands at about $415 (560,000 won) per month, while the <\/span>minimum cost of living<\/span><\/a> for a single individual is estimated to be around $1,480 (2 million won). This disparity suggests that even those receiving both old-age pension and basic pension may struggle financially, reinforcing the necessity for post-retirement employment.<\/span><\/p>\n

In his first New Year\u2019s address, Yoon emphasized the need for urgent <\/span>reforms<\/span><\/a> in labor, education and pensions. He articulated concerns over the looming <\/span>pension deficit<\/span><\/a> threatening the sustainability of the pension system. Projections indicate that South Korea\u2019s national pension could be <\/span>depleted by 2055<\/span><\/a>, pushing the country toward a pay-as-you-go system.<\/span><\/p>\n

While the ROK Ministry of Health and Welfare is crafting a pension reform strategy, early proposals have faced <\/span>backlash<\/span><\/a> for suggesting higher premiums and postponed payouts. The detailed plan is anticipated to be submitted to the National Assembly in the coming month.<\/span><\/p>\n

\"\"

President Yoon Suk-yeol attends the 2023 Youth Day commemoration ceremony in Busan, Sept. 14, 2023 | Image: ROK Presidential Office<\/a><\/em><\/p><\/div>\n

ADDRESSING THE YOUTH VOTE<\/b><\/p>\n

The Yoon administration, while placing emphasis on the elderly, cannot overlook the critical youth segment, especially those in their 20s and 30s. Initially, many voters in this cohort supported Yoon due to his emphasis on <\/span>enhanced societal fairness<\/span><\/a> and their disillusionment with the preceding Moon administration. However, many of those voters grew disenchanted due to events like the <\/span>Itaewon crowd crush incident<\/span><\/a>, opposition to the <\/span>proposed 69-hour workweek<\/span><\/a> and the continued challenges in the <\/span>real estate market<\/span><\/a>.<\/span><\/p>\n

Responding to persistent concerns like a youth unemployment rate hovering at 6% and the worrying number of 600,000 individuals classified as \u201cnot in education, employment, or training\u201d (NEET), the 2024 budget has earmarked about $10.8 billion (<\/span>14.6 trillion won<\/span><\/a>) for youth employment initiatives. This is a substantial increase of about $1.5 billion (2 trillion won) from the 2023 allocation.<\/span><\/p>\n

The proposed initiatives are multifaceted: <\/span>comprehensive career services and specialized programs<\/span><\/a> for NEET individuals, a <\/span>50% fee reduction<\/span><\/a> for those taking vocational qualification tests via the Human Resources Development Service of Korea, <\/span>living assistance payments<\/span><\/a> following three and six months of full-time work in high-priority industries, targeted incentives for <\/span>young farmers<\/span><\/a> to boost rural areas, including preferential guarantees and housing provisions, and <\/span>infrastructural enhancement<\/span><\/a> for aging industrial areas.<\/span><\/p>\n

However, there\u2019s a prevailing sentiment of doubt regarding the effectiveness of these measures. They might not address the deeper structural challenges of South Korea\u2019s bifurcated labor market. Given the high number of young Koreans obtaining post-secondary education, they often find themselves vying for limited roles in large conglomerates.<\/span><\/p>\n

The measures for Small and Medium Enterprises (SMEs) seem insufficient in creating roles that align with the qualifications and aspirations of these graduates. Without confronting these underlying issues, the budget might not resonate with young voters and could further exacerbate their disillusionment.<\/span><\/p>\n

The stakes are high for the PPP and Yoon. Failure to secure a majority in the National Assembly could result in a historically unprecedented parliamentary gridlock throughout Yoon\u2019s term. Such a deadlock, particularly in this period of pronounced partisan divide, would be a significant setback for his administration.<\/span><\/p>\n

Edited by John Lee<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Domestic Politics<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

Ahead of next year\u2019s legislative elections scheduled for April 10, the Yoon Suk-yeol administration has unveiled its 2024 budget proposal, stepping into a charged political arena.\u00a0 The ruling People Power Party (PPP) is strategically positioning itself against the dominant Democratic Party (DP) in the National Assembly. With both parties separated by a razor-thin margin in […]<\/p>\n","protected":false},"author":10407,"featured_media":2202386,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[24,27],"class_list":["post-2202385","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-business-economy","tag-domestic-politics"],"yoast_head":"\nYoon's budget shifts South Korea\u2019s economic strategy amid political tensions - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2023\/09\/yoons-budget-shifts-south-koreas-economic-strategy-amid-political-tensions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Yoon's budget shifts South Korea\u2019s economic strategy amid political tensions - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"Ahead of next year\u2019s legislative elections scheduled for April 10, the Yoon Suk-yeol administration has unveiled its 2024 budget proposal, stepping into a charged political arena.\u00a0 The ruling People Power Party (PPP) is strategically positioning itself against the dominant Democratic Party (DP) in the National Assembly. 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