The long-term unemployment rate of South Korea has hit an a 14-year high. According to Statistics Korea, the number of jobseekers has surpassed the 1 million mark for the first time since 2000 (Yonhap News, 2017). Of the total number of jobseekers, around 133,000 workers have been unemployed for more than half a year, and around 10,000 have been unemployed for more than a year.
While the unemployment rate has been steadily fluctuating around 3.7 percent in the past few months, the fact that the long-term unemployment rate has been increasing is an unfavorable indicator of South Korea’s economic growth. In fact, the Korean government has forecasted only 260,000 new jobs to be created by the end of the year. Furthermore, the Bank of Korea, South Korea’s central bank, has recently cut the growth outlook to 2.5%, further indicating a strain in Korea’s economic growth. “It is evidence of low growth being prolonged,” says Byung Yang-kyu, senior researcher at the Korea Economic Research Institute (The Korea Herald, 2017). With the political instability in light of the ever-growing political scandal in Korea, there lies much uncertainty for Korea’s economic growth in 2017.
With a plethora of government-issued statistics reports on Korea’s declining economic growth, the debate over a universal basic income for Korean citizens has been brewing. According to a survey of 1000 Korean adults by Macromill Embrain, approximately 50% agreed with the idea of introducing a universal basic income, 28% disagreed, and 22% were indifferent. The universal basic income has been a topic of contention in the political stage. Seongnam Mayor Lee Jae-myung’s approval ratings sharply rose after expressing his support for such a policy. Other politicians such as former Prime Minister Chung Un-chan has commented that the introduction of the basic income could “lead to reinvigorating the country’s sluggish economy” (The Korea Herald, 2017).
However, on a practical level, there are shortcomings to the universal basic income argument. According to the Korea Herald, in order to provide each Korean citizen with a monthly basic income of 300,000 won (around 255 USD), it would cost 184 trillion won. Since the government raises only 150 trillion won in corporate tax, income tax, and VATs, an implementation of a basic income would inevitably result in budgetary cuts in social benefits and government transfers, arguably defeating the purpose of providing additional income to Korean workers.
Though the debate over a universal basic income continues and with the Korean economy slowing down, it is clear that the Korean government must plan to reboot long-term economic growth. Reigniting Korea’s economy will be a defining political issue in the upcoming months of selecting the next President of South Korea.
- Yonhap News: http://english.yonhapnews.co.kr/news/2017/01/15/0200000000AEN20170115000951320.html
- The Korea Herald: http://www.koreaherald.com/view.php?ud=20170109000847