South Korean government that seeks to improve its people’s wellbeing and add quality jobs plans to spend a record 429 trillion won ($380.6 billion) next year.

The new government under liberal President Moon Jae-in on Tuesday proposed budget for 2018 that is up 7.1 percent from 400.5 trillion won initially earmarked for this year, according to a statement from the finance ministry. This is the largest on-year jump since 2009 when the Korean government raised spending by 10.6 percent to cope with the 2008 global financial crisis. When including the 11 billion won supplementary budget for this year approved in July, the total spending for next year will be 4.6 percent more than this year’s 410.1 trillion won.

The on-year increase is also 2.6 percentage points higher than the government’s 4.5 percent nominal growth rate forecast for next year.

Moon during his campaign vowed to up annual fiscal spending growth around 7 percent from the past average of 3.5 percent.

The government outlined next year’s spending with a focus on creating jobs, boosting growth by bolstering income and consumption, and securing momentum for innovative growth as well as guaranteeing public safety and developing human resources. Under such plans, it will spend more to boost jobs and improve social welfare while cutting spending on social overhead capital and cultural projects that were encouraged during the previous administration under former President Park Geun-hye.

The biggest increase in next year’s budget will be social welfare, rising 12.9 percent to reach 146.2 trillion won and making up the largest-ever 34 percent of the total. The government also raised budget allocated for education and general administration by 11.7 percent and 10.0 percent, respectively.

Job creation, the top priority of President Moon Jae-in’s economic agenda, is set to receive 19.2 trillion won, up 12.4 percent on year. The government increased budget for youth job creation by 20.9 percent to 3.1 trillion won.

Earlier this month, the government proposed to up levies on super-rich individuals and companies - mostly chaebols - to help finance its increased social welfare programs. It also proposed tax incentives for employers complying with the new government’s slogan of bolstering hiring and income and improving working terms for employees.

The government estimated it would need extra tax revenue of 178 trillion won to finance the 100-point major state agendas mostly enhancing social security and increasing jobs in the public sector over the next five year under Moon leadership.

According to the newly proposed budget for next year, the government will also spend 64.1 trillion won on education, up 11.7 percent from a year earlier.

Spending allocated solely for social welfare and education sectors exceed 210 trillion won, accounting for nearly half of next year’s expenditure.

Underscoring the growing threats from North Korea with its nuclear and missile tests, the government also proposed to expand spending for national defense by 6.9 percent to 43.1 trillion won. Diplomatic and unification funds will increase by 5.2 percent to 4.8 trillion won to improve the inter-Korean relationship.

Funding for social overhead capital projects will decrease 20 percent to 17.7 trillion won. The related budget has been reduced for three consecutive years after marking 4.5 percent drop in 2016 and 6.6 percent drop in 2017.

Spending for culture, sports, and tourism that jumped under former Park Geun-hye administration will be cut 8.2 percent to 6.3 trillion won.

The proposed outline for next year’s budget will be submitted to the National Assembly for review on Friday. The deadline to pass the bill is set on December 2.

By Cho Si-young

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]