SEOUL, March 15 — South Korea said today it would propose a 4 trillion won (approx, RM14.9 billion) supplementary budget and boost business subsidies to help cut the country’s high youth unemployment, which it sees reaching a dangerous level.

Youth unemployment in South Korea hit record levels last year. By offering more incentives, President Moon Jae-in hopes to increase the full-time job prospects for millennials in the face of challenging job market conditions, which has prompted many to postpone their marriage and pushed others into poverty.

“To turn the youth employment situation around, which is at a disastrous level, we need financial resources,” Moon said in a cabinet meeting. “An extra budget to add jobs for young Koreans is inevitable,” the president added.

The government is proposing to give small- and medium-sized businesses 9 million won (US$8,443.65) in annual cash subsidies for each entry-level job they create over the next three years, up from the current 6.7 million won.

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High school and college graduates will also be able to receive bigger subsidies while job-searching, and will be exempt from income taxes for the first five years of full-time employment, subject to certain conditions.

The government plans to submit in early April the extra budget bill to the National Assembly, where Moon Jae-in’s Democratic Party holds 41 per cent of the 293 seats.

Of the proposed extra budget, about 2.6 trillion won will be funded by excess tax revenue from last year, while another 1 trillion won will come from public funds managed by state-owned firms, Finance Minister Kim Dong-yeon said at a news conference.

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The government will not be issuing additional treasury bonds to fund the supplementary budget, Kim added.

Youth unemployment in South Korea reached 9.8 per cent in 2017, almost three times the national rate of 3.7 per cent and worse than the 4 per cent youth unemployment rate in Japan and 8.1 per cent in the United States.

A broader youth unemployment rate that also counts those in between jobs seeking full-time employment was at 22.7 per cent in February.

Boosting income for young South Koreans has become an even more urgent task for policymakers as it seeks to broaden its tax revenue base to fund welfare costs for an ageing population.

South Korea has the fastest ageing population among Organization for Economic Co-operation and Development nations.

Moon budgeted extra spending of 11 trillion won (US$10.20 billion) as soon as he took office in 2017, in a push to create social service jobs and offer subsidies for maternity leave. — Reuters