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(LEAD) Gov't to take measures, bring in 4 tln-won budget to address chronic youth unemployment

All Headlines 17:19 March 15, 2018

(ATTN: CHANGES headline, lead; UPDATES 2nd para, paras 10-11; REPLACES photo at bottom)
By Park Sang-soo

SEJONG, March 15 (Yonhap) -- The government on Thursday unveiled a set of measures, including bolder financial and tax incentives, and the use of an extra budget, to tackle the chronic unemployment of young people, with the aim of stabilizing the country's youth jobless rate in the 8 percent range by 2021.

The measures center on extending direct financial and tax incentives to young jobseekers. The government also proposed broader support for startups launched by young people, with part of the financing to come from a supplementary budget of 4 trillion won (US$3.75 bln).

Under the newly announced measures, 9 million won will be directly given to every new regular worker at smaller firms every year, which the ministry says is equivalent to one-third the annual salary of a full-time employee at large firms. The financial support will be a temporary move and last for three years, it added.

The allowance is aimed at narrowing the wage discrepancy between large and small companies, which have been cited as a key reason that young jobseekers are hesitant about starting their careers in smaller firms, according to the ministry. Many who start off their careers at smaller firms eventually quit in the first couple of years.

Also, a new regular worker will be exempted from income tax for five years, and low-interest loans will be extended to young workers at smaller firms to help them cover part of their residential costs, the ministry said.

The government also plans to increase hiring by public firms to 28,000 from its earlier target of 23,000 to help raise employment among young people.

The measures also include loans to startups, as well as tax incentives, for five years.

Jobseekers wait in a long line to enter a job fair organized by foreign companies based in South Korea at a convention center in Seoul on Oct. 12, 2017. (Yonhap)

The ministry said the country's youth unemployment has been deepening since the 1990s, and the gap between the headline jobless rate and the youth jobless rate also has been widening.

It said youth unemployment has been accelerating due to structural changes in the industrial, educational and labor sectors, and because of lower demand for new workers.

Finance Minister Kim Dong-yeon said the extra budget would not hurt the country's fiscal soundness, as it would be financed with rolled-over tax surplus. "We don't have any plan to sell debt or use extra tax income," Kim said during a press briefing.

The government will accelerate its move to form an extra budget and wants to finalize it by the end of April.

In January, President Moon Jae-in called for an all-out effort to create new quality jobs for young people and said the country's high youth jobless rate is a national disaster.

Creating quality jobs, especially for the young, was one of Moon's key election pledges. The president has promised to add 810,000 new jobs in the public sector during his single five-year term, which ends in May 2022.

Moon has had several display panels installed in his office to provide daily data on the country's jobless rate and other job-related developments.

As of the end of December, the unemployment rate for people between 15 and 29 years of age came to 9.2 percent, nearly three times higher than the national jobless rate of 3.3 percent.

President Moon Jae-in (C) applauds during a conference at his office Cheong Wa Dae in Seoul on March 15, 2018, on measures to ease chronic youth unemployment. (Yonhap)

sam@yna.co.kr
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