Korea to add W60tr more to tackle economic polarization by 2025

South Korea will scale up its “Korean New Deal” stimulus package by making additional investments worth 60 trillion won ($52.2 billion) to nurture human talents for future industries, and improve ill-functioning employment and the social safety net, the government said Wednesday.

Marking the first anniversary of the launch of the Korean New Deal initiative, President Moon Jae-in unveiled an upgraded version focusing on responses to deepening social inequality and economic polarization amidst the COVID-19 pandemic.

The newly added pillar of the initiative called the Human New Deal will complete the existing campaign that consists of the two key agendas the Digital New Deal and the Green New Deal, which center on digitalization, sustainable development and balanced regional development.

“(The project) started as a large-scale job creation strategy to better deal with the COVID-19 crisis, but it has evolved to (a grand scheme) for transition to a low-carbon economy,” the president said in a live address to the public. “And with the newly added Human New Deal (segment), (the structure of) the Korean version of New Deal has become a complete one.”

For the new version of the program, total investment will be increased to 220 trillion won by 2025 from 160 trillion won, which was initially planned last year.

The government also estimated that the number of direct and indirect jobs created by the New Deal will increase by another 600,000, adding to the 1.9 million jobs previously expected.

Rapid changes in the business and social landscape here and abroad, induced by the prolonged pandemic, require Asia‘s fourth-largest economy to come up with new strategies for the post-COVID-19 era, Finance Minister Hong Nam-ki said.

“The government is implementing the ‘Korean New Deal 2.0’ strategy to reinforce inclusiveness and innovation by adding a new agenda such as carbon neutrality to the existing version and strengthening efforts to address the safety net issues with the Human New Deal,” he said.

In detail, the nation will invest some 49 trillion won in digital projects by 2025 to support information and communication technology convergence businesses such as an open metaverse platform and to enhance digital competitiveness by nurturing core technologies like cloud computing and blockchain technology.

Institutionalization of distance education and expansion of smart hospitals will be pursued as part of the plan to accelerate the development of digital infrastructure.

Around 61 trillion won will be invested in the Green New Deal. A new task given to the project is laying the groundwork to live up to the country’s greenhouse gas emissions reduction targets. In October, Korea plans to unveil a higher target of carbon emissions reduction, having initially pledged to cut 24.4 percent by 2030 from the total national emissions in 2017.

Under the envisioned scheme, the greenhouse gas measurement and evaluation system will be improved and support for vulnerable groups sensitive to climate impacts will be provided.

For the Human New Deal, the government will spend 50 trillion won to advance inclusive growth by strengthening support for young people who struggle to find houses and jobs.

Education programs tailored to multicultural families and disabled people will be launched while high-speed internet services will be expanded in rural areas.

To encourage private sector engagement in the New Deal projects, a 100 trillion-won government policy fund will be launched later this year. A similar fund worth 200 billion won introduced by the government in March sold out in a week.

By Park Han-na (hnpark@heraldcorp.com)