July 19, 2018 09:59
The government has slashed its job creation target for this year from 320,000 to 180,000 and its economic growth outlook from three to 2.9 percent.
The pessimistic turn came at a meeting of economy-related officials on Wednesday after the Moon Jae-in administration pumped W33 trillion worth of taxpayers' money into job creation over the last two years (US$1=W1,132).
Finance Minister Kim Dong-yeon said, "The economic outlook is tough, and the situation could get worse if jitters over international trade and market sentiment fails to perk up."
Until recently the Ministry of Strategy and Finance had insisted that the pace of recovery is holding.
The government has implemented a range of policies aimed at boosting the earnings of poorer workers as part of its goal of achieving income-driven growth.
First it decided to triple financial support paid to low-income households to W3.8 trillion next year. The number of households benefiting is expected to rise from 1.66 million to 3.34 million or 17 percent of the population. That will add W2.6 trillion a year to the government's budget.
It also decided to award a W300,000 in cash to senior citizens in the bottom 20 percent of the income bracket starting next year, three years earlier than scheduled.
It will also give W500,000 a month for six months to young jobseekers, up from 300,000 for three months. Each of those welfare schemes will cost W300 billion in taxpayers' money.
As an additional measure to boost consumption, the government also decided to reduce taxes for drivers who buy a new car until the end of this year.
Early this year, the government expressed confidence in its goal of creating tangible changes to match a per-capita GNI of US$30,000. But just six months later, it has admitted that growth is sputtering.
Some critics feel the development casts doubt on the government's entire income-driven growth model. Nam Sung-il at Sogang University said, "The government haphazardly raised the minimum wage and now intends to use taxpayers' money to quell public complaints after serious side effects emerged. This will only make the problem worse."
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