South Korean President Moon Jae-in delivered his final budget speech on Monday at the National Assembly. It was an opportunity to explain next year’s budget plan, which has been expanded to 604 trillion won, and gave his opinion on overall state affairs. Government spending has increased by 50 percent five years into the current administration, and the national debt has surpassed the 1,000 trillion won mark for the first time in history. The current administration has been generous in increasing populist welfare and employment budget with debt throughout its term. The final budget speech is also being criticized for containing too many “reasons to spend money.” The burden created by “fiscal populism” is likely to fall on the next administration and the people.
President Moon said next year’s budget will be used for a complete return to normal life and livelihood of the public. The current administration’s fiscal management is close to failing even considering the COVID-19 situation. Its welfare and employment budget, which has surpassed 200 trillion won, is focused on one-off cash support. Even after spending about 100 trillion won on job creation over the past four years, the number of job seekers giving up their search for work is at its highest. Whenever money was needed, for example in response to the COVID-19 crisis, the government responded by increasing the budget, saying the country has sound public finance. No effort was made to cut down on unnecessary spending.
The burden of wasteful public spending is falling on the people’s shoulders. Due to deficit accumulated as the result of employment funds spent on short-term job creation projects, national employment insurance premium will rise again next year following 2019. Insurance rates have risen for the fifth year in a row as the scope of health insurance coverage has been greatly expanded as a result of “Moon Jae-in Care.” Furthermore, health insurance finances are in danger of being exhausted in the next government.
Despite the circumstances, President Moon said the government has significantly lowered the burden of medical expenses on the people. This is why the speech is being criticized as full of self-praise. The two most difficult items to reduce in government finances are labor cost and pension of civil servants. Under the current administration, the number of civil servants has been increased by about 120,000, more than double the number of civil servants increased in the previous two governments. This high cost structure is becoming permanent but the government is avoiding a pension reform. The current administration is taking all the credit and shifting the responsibility to the next administration.
The government belatedly said the government is running out of money, but did not stop expanding the budget. President Moon said the government struggled to achieve harmony between budget expansion and fiscal soundness, but it was not enough to persuade the public. The next administration will be faced with a situation, where there are plenty of places to spend money on with a lot of debt. All these burdens will inevitably fall on companies and the people.