文 The government pays condolences and the next government pays 5 policies

More than three and a half years have passed since President Moon Jae-in took office. After starting his term of office in May 2017, he made several policies. Previous government officials were handed over to the trial for liquidation of the redemption, and despite many opposition, they pushed for a policy of raising the minimum wage and eliminating nuclear power plants.

In response to the new coronavirus infection (Corona 19), numerous policies have been poured out this year. He came out with a nationwide employment insurance system saying that it would eliminate the blind spot of employment insurance. In the name of supporting the Corona 19 damage, various expenditures have been increased.

They also showed motivation for mid- to long-term tasks. By 2050, it declared that it would achieve carbon neutrality that equalizes carbon emissions and absorption, and announced measures to reduce fertility and aging population. They said they would also promote the reform of the national pension system.

However, the Moon Jae-in administration showed common ground whenever solving these problems. The first thing to do to raise the approval rating is to put it off the back of the challenge that doesn’t help votes. The populist budget is overwritten within the term of office and the budget restructuring is passed on to the next regime. It is common to hurry to spend money and postpone the plan for financing.

For example, they said they would do national employment insurance, and decided to discuss the issue of subscribing to employment insurance for self-employed people after 2022. It was decided to apply the fiscal rules from 2025 as the deficit budget was organized annually with expanded fiscal budget.

The key issue of carbon neutrality, the plan to ease the burden on businesses and consumers, was handed over to the next government. The next government was also responsible for financing measures for the low birth rate and aging population. The direction for the national pension reform is still not suggested. That is why the Moon Jae-in administration has been criticized for “only contemplating and delaying responsibility.” Here are five examples of the Moon Jae-in administration’s policy, which only walks on the’flower road’ and passes the’thorny field road’ next.

① National employment insurance… Will pay special unemployment benefits with workers’ money from 2022?

On the 23rd, the government announced a roadmap for the so-called “national employment insurance system,” which will significantly expand the targets of employment insurance by 2025. Artists, special employment workers, platform workers, and self-employed people will be enrolled in the order of employment, and by 2025 all’working people’ with income will be covered by employment insurance.

In order to keep the promise according to the roadmap, the key is to establish an income monitoring system. In addition, the biggest challenge among the expanding targets is the self-employed. Employment insurance coverage for artists has already started on the 10th, and the law has been passed for special high school workers, and its enforcement has been confirmed in July next year.

However, if you look at the roadmap that the government has laid out, the core tasks and the top challenges have been attributed to the next government, not the current one. Employment insurance application to special high school workers will begin in July of next year, and the establishment of a real-time income information sharing system with the National Tax Service and Labor Welfare Corporation will be established in July 2022.

When it comes to self-employed people, it is virtually’no plan’. It is explained that it was difficult to come up with a specific application plan in a short period of time due to the nature of 4 million self-employed people, but the content of the roadmap is to establish a social dialogue organization in the first half of next year to begin discussions. The government plans to discuss how to join by the second half of next year through social dialogue and establish a step-by-step plan only in the second half of 2022. This means that the current government does not make any decisions regarding the application of self-employed employment insurance.

Since the introduction of the system in 1995, there has been a plan to change the employment insurance system, which was centered on wage workers, to income-oriented, and to a personal management system like health insurance and national pension, but the situation is not very different. By forming a TF for the improvement of the employment insurance system, it was decided to discuss comprehensive application plans until the first half of 2024, and to promote the revision of related laws until the second half of the same year.

The same applies to countermeasures against concerns about fiscal soundness resulting from the expansion of employment insurance coverage. According to the Korea Labor Institute, if the special employment insurance is implemented, a deficit of 17.6 billion won is expected in 2025. However, the government is advocating that stable fiscal operation is possible for five years from 2020 to 2025. Minister of Employment and Labor Lee Jae-gap said, “Whenever the target is expanded, we will conduct performance evaluation and financial estimation after a certain period of operation to find complementary measures.” I will go out.”

② Financial soundness… Increased spending and subordinated debt management

Since the inauguration of President Moon Jae-in, the government budget has increased dramatically. Since 2018, the budget has increased by 8 to 9% every year. In particular, discretionary expenditure, which the government can adjust relatively freely, has increased rapidly. Discretionary expenditure in 2022, when the current government prepares the final budget, is 300.6 trillion won, an increase of 44.3% from 212 trillion won in 2018.

At the same time, the Moon Jae-in administration declared that it would lower the rate of increase in spending from the next presidential term. It is through a mid-term fiscal management plan determined every five years. The Ministry of Strategy and Finance designed the total fiscal expenditure growth rate from 9.1% this year to 8.5% in 2021 and 6.0% in 2022 through the ‘2020-2024 National Fiscal Management Plan’ announced in September. The growth rates of fiscal expenditures in 2023 and 2024, the next government terms, were lowered to 4.5% and 4.0%, respectively.

The increase in discretionary expenditure was further reduced. The rate of increase in discretionary spending, which is 12.4% next year, will drop to 6.3% in 2022, and it is planned to be 4.8% in 2023 and 1.9% in 2024. Many point out that such a plan is unrealistic. This is because when a new president is elected in 2022, a lot of discretionary expenditures can be incurred to promote new flagship projects.

Fiscal soundness is deteriorating day by day due to increased government spending. The national debt, which was 66.2 trillion won in 2017, will increase by 29.58 trillion won over the next four years until next year. The ratio of national debt to gross domestic product (GDP) also rises 11.3 percentage points from 36.0% in 2017 to 47.3% next year.

As the rate of increase in debt growth accelerated, the government belatedly announced in October that it would introduce the’Korean fiscal rules’. The fiscal rule is a legal mechanism that prevents the size of a debt or fiscal deficit from increasing beyond a certain level. However, the implementation period was nailed to 2025. It means that the financial soundness will be managed four years after the Moon Jae-in administration. In addition, there is also an exception rule that exempts the application of the fiscal rules in case of large-scale disasters and economic crises, and it is possible to temporarily violate the fiscal rules if only’fiscal consolidation measures’ are prepared.

③ Carbon neutral… Erasing the corporate consumer burden from the next government

President Moon’s declaration of ‘2050 carbon neutrality’ in October is expected to become the next government’s task. Only the goal was presented, and in detail, we decided to discuss how and how much to reduce carbon from next year. It takes about 1 to 2 years to complete the reorganization of related legal plans. It is the responsibility of the Daum Government to implement carbon neutrality and have its performance checked. Carbon neutral refers to a state in which net emissions become zero by offsetting carbon emissions and absorption.

The government plans to prepare a carbon neutral scenario by next June and reflect it in various national plans by 2023. For carbon neutrality, scenarios are prepared for each strong, medium, and weak level of how much carbon can be reduced by sectors such as energy, industry, transportation, and architecture. Develop strategies for each field based on the scenario.

For example, the energy sector is prepared by the Ministry of Trade, Industry and Energy until the fourth quarter of next year, and the forest sector is prepared by the Forest Service until the third quarter of next year. It is planned to establish a’Manufacturing Renaissance 2.0′ strategy by the fourth quarter of next year on how to transform the high-carbon industry, which is considered the key to realizing carbon neutrality. The carbon-neutral strategy will be fully implemented in 2022 or later.

The government has not made a clear stance on sensitive policies such as raising the gas tax or introducing a carbon tax, saying, “We will discuss it later.” On the 7th, the government announced a strategy to achieve carbon neutrality in 2050, jointly with relevant ministries, and used an ambiguous expression that “we will strengthen the carbon price signal”. The explanation is that it will rebuild the carbon pricing system by comprehensively reviewing the tax, levy, and emission trading system.

Deputy Prime Minister Hong Nam-ki and Minister of Strategy and Finance said, “Specific matters will be further reviewed in the future” regarding the possibility of an increase in gas tax and electricity rates. did.

④ Low birthrate and aging countermeasures… Infant allowance payment from

The ‘4th Basic Plan for Low Fertility and Aged Society’, which was deliberated and confirmed at the State Council on the 15th, is also a typical example of skipping costs. The basic plan to be drafted by the Presidential Committee on Low Fertility and Aging is made every five years since 2005. This plan is also a countermeasure for low birthrate and aging from 2021 to 2025. As the number of births, which fell to 300,000 last year, dropped again to around 270,000 this year, this is an area that requires urgent measures.

However, all major policies implemented by this measure will begin in 2022. The increase of 400,000 won for infants under the age of 2 and medical expenses related to pregnancy and childbirth will be applied from births in 2022. When parents apply for maternity leave at the same time, the normal wage increase from 12 million won to 15 million won for three months is also starting from birth in 2022.

The fiscal requirement for the addition of such a new business is KRW 9.5 trillion. As the project is implemented from 2022, the burden will remain on the next government. In principle, there is a problem that children born in 2021 and their parents are excluded from the policy, which is the subject of the 4th Basic Plan for Low Fertility and Aged Society.

On the cause of this problem, opinions are divided even within the Committee for the Low Fertility and Aged Society. An official said, “The Moon Jae-in government is in power until the March 2022 election, so it is not completely out of control,” he said. “Next year, the money from the implementation of the New Deal will be released. The delay in implementation of the policy was explained by referring to the New Deal policy that has nothing to do with measures against low birthrate and aging population.

However, another official confessed that “the policy was finalized late and could not be reflected in the next year’s budget already confirmed by the National Assembly.” Seo Hyung-soo, vice chairman of the Low Fertility and Aging Society Committee, said, “I humbly accept the committee’s activities.”

In the opposition, there is a criticism that, “Isn’t it delayed to put more money into the New Deal policy by reducing the burden of new resources to be put into measures against low birthrates?”

⑤ National pension reform… When the national burden is expected to increase, it will be pushed back.

The reform of the national pension that the Moon Jae-in administration left for the next government’s share acts as a result of raising the burden of future generations. In the 2017 presidential election, President Moon pledged to increase the national pension’s income replacement rate (the amount of pension receipts to income) to 50%, which is downgraded to 40% in 2028. To do this, it was necessary to increase the amount paid for the national pension. The National Pension System Development Committee proposed a reform proposal that immediately raises the premium rate, which is currently 9%, to 11%, but in November 2018, President Moon ordered a direct review on the grounds of public opposition.

Afterwards, it was discussed by the Economic, Social and Labor Committee, but failed to reach an agreement. The National Assembly and the Ministry of Health and Welfare are giving each other the responsibility to “make a proper unitary plan”. The reform of the pension system, which has a huge impact on the people’s retirement life, should be addressed by the leader, but President Moon did not provide a clear direction for pension reform after 2019.

In 2015, former President Park Geun-hye succeeded in reforming the public service pension, which received more and less despite fierce opposition from the public service unions. President Moon, who was a member of the National Assembly at the time, opposes the government proposal, saying, “We need to reform the pension for public servants to reduce the finances.”

As the national pension reform is postponed to the next government, the burden on the youth generation is expected to increase. According to predictions by the Korea Development Institute (KDI), etc., if the current income replacement rate is maintained and the premium rate is not raised until the point of fund depletion, the insurance premium burden that future generations should bear will increase to 30% or more of income. The National Assembly Budget Office predicts that the National Pension Fund will be depleted by 2057. Even this did not fully reflect the impact of the low birth rate and aging population.

Reporter Jeong In-seol/Baek Seung-hyun/No Gyeong-mok/Koo Eun-seo [email protected]