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(EDITORIAL from Korea Times on July 25)

All News 06:59 July 25, 2016

Extra budget plan
Hasty stimulus program not enough to spur growth

The government, Friday, outlined a plan for an extra budget of 11 trillion won ($9.64 billion) to deal with the economic downturn and an unemployment crisis. It is part of the Park Geun-hye administration's 28 trillion won economic stimulus package aimed at achieving 2.8 percent growth this year. This is the third supplementary budget of the Park administration, following 17.3 trillion won in 2013 and 11.8 trillion won in 2015.

The extra budget plan has three main goals: to generate jobs, boost the regional economy and ease livelihoods of people earning middle and low incomes. It is uncertain whether any of the core outcomes are within reach, as the extra budget plan lacks concrete measures to put Asia's fourth-largest economy on a consistent path toward growth. This has been the problem with all of President Park's supplementary budgets which have failed to achieve their desired outcomes.

Repeating another hasty economic stimulus plan will not boost the economy amid rising uncertainties at home and abroad. Lifting Korea out of a period of low growth will take more fundamental measures and long-term thinking from policymakers.

President Park's latest extra budget plan seems to have once again been perceived without a sense of urgency to turn around the economy and add good jobs. The third supplementary budget is called a "job budget," underlining the need to respond to the crushing unemployment situation. The unemployment rate for those under 29 hit an all-time high of 12.5 percent in February. A recent government report showed that the unemployment rate for people aged between 15 and 29 reached 10.3 percent in June, marking the highest figure for that month since 1999. Due to a lack of jobs in the private sector, a record number of people are targeting government jobs by preparing for state exams for entering public service. The job situation is expected to worsen with the ongoing restructuring in key industries such as shipbuilding.

Finance Minister Yoo Il-ho said last week that the extra budget could generate about 68,000 jobs. These jobs are mostly part-time for only a few months and are far from providing the kind of economic stability people need. These temporary positions will be insufficient to respond to the unemployment crisis.

The National Assembly is expected to proceed with the budget plan on Aug. 12. Minister Yoo has asked for its swift passage so that the funds can be injected starting September. Since there is some time left, the Assembly should carry out a meticulous review of the government's plan in order to maximize the effects of the extra budget. Now it is up to the Assembly to ensure that the extra budget plan does not end up wasting money on ineffective projects that have no lasting impact on creating jobs and boosting the economy.

Parties should not use the plan as a subject of political wrangling. During the review proceedings, they should join hands to ensure the effectiveness of the extra budget plan and enhance it by including fundamental measures to revitalize the economy, such as developing new growth engines and supporting small and mid-sized firms.

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