[최훈길의뒷담화]The reason for the 4th disaster support fund even though the 3rd was not released

※All policies have a story. The Sejong Office tracks and tells the story behind the issue or policy discussion process.

[세종=이데일리 최훈길 기자] “It is expected that an additional budget (additional budget) will be formed in the second quarter of this year.”

Chung Se-eun, a professor of economics at Chungnam National University, who served as a member of the National Planning Committee, the underwriting committee of the Moon Jae-in administration, predicted this in a call with E-Daily on the 2nd. It is observed that as early as April, additional support for self-employment and jobs, that is, the 4th emergency disaster support fund will be organized.

A rental notice board is posted at a restaurant located in Dodam-dong Food Alley in Sejong City. Due to the COVID-19 social distancing, customers are cut off and self-employed business is increasing due to high rents. [사진=이데일리 최훈길 기자]

The third subsidy is paid on the 11th, but the collapse of self-employment is severe

Earlier, on the 29th of last month, Deputy Prime Minister Hong Nam-ki and Minister of Strategy and Finance announced measures including the third disaster support fund. Named as’Custom Damage Support Measures’, the main point of this measure is to provide 9.3 trillion won to 5.8 million people including self-employed people from the 11th.

Although the 3rd subsidy has not yet been executed, there are several reasons that an additional April is expected.

First of all, it is because of the ‘3-month effect’ of the disaster support fund. Professor Se-eun Jeong predicted that, “Looking at the precedent last year, the effect of this disaster subsidy will only be effective for about three months.”

Earlier, after the first disaster subsidy was paid in May last year, retail sales in May and June recorded positive, but in July, the third month, it turned to negative (-6.0%). The secondary funding effect is shorter. Retail sales were positive in September when the 2nd Disaster Subsidy was paid, but negative for the second consecutive month from October to November.

Of course, the flow of the game can change depending on the vaccination. This is because, depending on the vaccination starting in February, the economy may recover in the second quarter. The total number of vaccines purchased by Korea exceeds the total population of 56 million. AstraZeneca will be introduced in phases in the first quarter of this year, Janssen and Modena in the second quarter, and Pfizer in the third quarter.

In addition, we need to see the effect of early budget execution. The Ministry of Science and Technology allocated 72.4% of the total budget in the first half of this year, of which the project cost execution target was set at 63%. It means that 63% (202 trillion won) of management target project expenses (320 trillion won) excluding personnel expenses and expenses of next year’s total budget (558 trillion won) will be invested in the first half. This is the highest early execution rate ever and the highest early execution cost.

Nevertheless, the reason for an additional April is expected because the damage to self-employment is significant. According to Korea Credit Data, in the fourth week of last month (December 21-27), credit card sales at small business stores in Seoul fell 61% from last year. Even compared to the first week of September (-37%), the second epidemic period of Corona 19, the sales decline has doubled. It is expected that the’self-employment wounds’ will not recover in a short period of time. Small business organizations, etc., are already requesting additional support after the third subsidy.

Due to the re-proliferation of Corona 19 and the decline in social distancing, credit card sales of small business owners in Seoul fell to 61% year-on-year. Unit=% [자료=한국신용데이터]

◇This year, the number of employees hired, the lowest ever… Concerns about youth unemployment

In addition, this year, the employment crisis is expected to overlap. According to the Ministry of Employment and Labor, the number of employees (from the fourth quarter of last year to the first quarter of this year) to hire businesses with five or more regular employees was only 253,000. This is the smallest ever since the Ministry of Employment and Employment initiated a related investigation since 2011 (based on the fourth quarter of each year to the first quarter of the following year). Exports in December turned positive (12.6%), but the employment indicator, an indicator of welfare, is not expected to be easy in the first half of this year.

Kwon Soon-won, a professor of business administration at Sookmyung Women’s University, said, “It is difficult to recover a job once lost, and it is more difficult to create a new job in the current phase.” I predicted.

This year, as in last year, controversy over the method of supporting disaster subsidies, controversy over equity and dead zones of subsidies, controversy over financial burdens such as an increase in national debt, and polarization of income are expected to rise. A debate with no correct answer is expected. It is also correct to point out that’zaringobi’ is saving finances in a situation where self-employed and low-income families are collapsing.

Professor Seeun Jeong said, “The wealth of stocks and real estate will increase in the coronavirus, but the polarization will become more difficult this year for the poorest.” “As the IMF and OECD point out, Korea has financial capacity. “Finance should play a big role this year as well.” This year, we need to think more about what role the state should play in the current situation where the private sector has contracted.

Businesses with five or more commercial employees (from the fourth quarter of last year to the first quarter of this year) had only 253,000 employees. This is the smallest scale ever since the Ministry of Employment and Employment started a related investigation after 2011. Based on the fourth quarter of each year to the first quarter of the following year. Unit = 10,000 [자료=고용노동부]

According to Statistics Korea’s industrial activity trend, after the first disaster support payment was paid in May last year, retail sales in May and June recorded positive, but turned to negative (-6.0%) in July, the third month. The secondary subsidy effect is shorter. Retail sales were positive in September when the second disaster subsidy was paid, but recorded negative for the second consecutive month from October to November. Unit=% [자료=통계청]

※ Additional budget (additional)= This is a budget that has been revised for an unavoidable reason in a situation where the annual budget has already been set. In the old fiscal law (Article 23), additional budgets and revised budgets were classified, but the current national fiscal law encompasses them and marks them as additional revised budgets. Additional budget refers to a budget that is an increase in the current budget, and correction budget refers to a budget that is changed within the limit of the current budget.

According to the current National Finance Act (Article 89), the government is △in case of a war or a large-scale natural disaster △In case of a major change in internal and external conditions such as economic recession, mass unemployment, change in inter-Korean relations, or economic cooperation △ Additional budgets can be organized when the expenditure that the state has to pay in accordance with laws and regulations incurs or increases. Subsequently, the additional administration will be confirmed through a plenary session of the National Assembly.

The largest supplementary supplement ever, totaling 3,510 trillion won, was passed through the National Assembly on July 3, 2020. Additional supplements have been organized every year since 2015. Additional supplementary events were organized once each from 2015 to 2019 and four times in 2020. It has been 59 years since 1961 that additional supplementary administrations were organized four times a year.