Korea mulls direct cash transfers to low-income families

South Korea announced Sunday that it will supply disaster relief funds to low-income households amid the economic fallout from the coronavirus pandemic.

The government will send emergency aid in the form of one-time cash payments to 10 million households earning less than the median income, according to the Ministry of Finance and Economy. 

The median income is the middle of the income distribution, where half the households earn more and half earn less. The median income of a four-member household is estimated at nearly 4.7 million won ($3,885), government data showed. 

The amount paid will vary depending on the size of the household. Four-member households are eligible for up to 1 million won. Smaller households will get less and bigger households will get more, the Finance Ministry said. 

President Moon Jae-in and related minsters are set to confirm exact amounts and other details during the third emergency economic council session Monday.

Starting next month, the government will also reduce the cost of health and workers’ compensation insurance for low-income households and small-business owners, by up to 50 percent for three months. 

In addition, monthly payments for the national pension plan and employment insurance will be suspended for a couple of months. Negotiations are underway among government agencies to finalize the duration of the suspension, the exact amount of tax relief to be provided and the targets of the relief programs, the officials said.

To assist job seekers in low-income households, the Ministry of Employment and Labor will offer monthly stipends of 500,000 won for three months to people aged 69 or under whose income falls below the 60th percentile.

Along with the direct cash transfers, the Ministry of Health and Welfare has partnered with municipal government officials to offer vouchers to children and senior residents in the lowest income brackets for four months. Four-member households can receive up to 1.4 million worth of vouchers under the plan. 

By Choi Jae-hee (cjh@heraldcorp.com)